UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 20-F
(Mark One)
[_]          REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                       OR

[X]              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2005

                                       OR

[_]             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                        For the transition period from to

                         Commission file number 1-13944

[_]        SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report.     None

                     NORDIC AMERICAN TANKER SHIPPING LIMITED
-------------------------------------------------------------------------------

             (Exact name of Registrant as specified in its charter)

                               ISLANDS OF BERMUDA
 ------------------------------------------------------------------------------

                 (Jurisdiction of incorporation or organization)

                                  Thistle House
                                4 Burnaby Street
                                 Hamilton, HM11
                                     Bermuda

                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.
                                                NAME OF EACH EXCHANGE
          TITLE OF EACH CLASS                    ON WHICH REGISTERED

             Common Shares                     New York Stock Exchange
       -------------------------              -------------------------

Securities  registered or to be registered pursuant to Section 12(g) of the Act:
     None

Securities for which there is a reporting  obligation  pursuant to Section 15(d)
of the Act:     None

Indicate the number of  outstanding  shares of each of the  issuer's  classes of
capital  or common  stock as of the close of the  period  covered  by the annual
report.

Common Shares, par value $0.01                                        21,046,400

Indicate by check mark if the  registrant is a well-known  seasoned  issuer,  as
defined in Rule 405 of the Securities Act.

                                 [_] Yes   [X] No

If this report is an annual or transition report,  indicate by check mark if the
registrant  is not required to file  reports  pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.

                                 [_] Yes   [X] No

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                 [X] Yes   [_] No

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer.  See definition of accelerated
filer and large  accelerated  filer in Rule 12b-2 of the  Exchange  Act.  (Check
one):

Large accelerated filer [X]   Accelerated filer [_]   Non-Accelerated filer [_]


Indicate by check mark which financial statement item the Registrant has elected
to follow.

                             Item 17 [_]   Item 18 [X]

If this is an annual report,  indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act).

                                 [_] Yes   [X] No

<PAGE>

                                TABLE OF CONTENTS

Item 1.        Identity of Directors, Senior Management and Advisers...........6
Item 2.        Offer Statistics And Expected Timetable.........................6
Item 3.        Key Information.................................................6
      A.       Selected Financial Data.........................................6
      B.       Capitalization And Indebtedness.................................8
      C.       Reasons For The Offer And Use Of Proceeds.......................8
      D.       Risk Factors....................................................8
Item 4.        Information On The Company.....................................15
      A.       History And Development Of The Company.........................15
      B.       Business Overview..............................................16
      C.       Organizational Structure.......................................28
      D.       Property, Plant And Equipment..................................28
Item 5.        Operating And Financial Review And Prospects...................29
      A.       Operating Results..............................................33
      B.       Liquidity and Capital Resources................................30
      C.       RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC............32
      D.       Trend Information..............................................32
      E.       Off Balance Sheet Arrangements.................................32
      F.       Disclosure Of Contractual Obligations..........................32
Item 6.        Directors, Senior Management And Employees.....................33
      A.       Directors And Senior Management................................33
      B.       Compensation...................................................36
      C.       Board Practices................................................37
      D.       Employees......................................................37
      E.       Share Ownership................................................37
Item 7.        Major Shareholders And Related Party Transactions..............38
      A.       Major Shareholders.............................................38
      B.       Related Party Transactions.....................................38
      C.       Interests Of Experts And Counsel...............................38
Item 8.        Financial Information..........................................38
      A.       Consolidated Statements And Other Financial Information........38
      B.       Significant Changes............................................39
Item 9.        The Offer And Listing..........................................39
Item 10.       Additional Information.........................................40
      A.       Share Capital..................................................40
      B.       Memorandum And Articles Of Association.........................40
      C.       Material Contracts.............................................42
      D.       Exchange Controls..............................................42
      E.       Taxation.......................................................43
      F.       Dividends And Paying Agents....................................43
      G.       Statement By Experts...........................................43
      H.       Documents On Display...........................................43
      I.       Subsidiary Information.........................................44
Item 11.       Quantitative And Qualitative Disclosures About Market Risk.....44
Item 12.       Description Of Securities Other Than Equity Securities.........44
Item 13.       Defaults, Dividend Arrearages And Delinquencies................44
Item 14.       Material Modifications To The Rights Of Security Holders
                   And Use Of Proceeds........................................44
Item 15.       Controls And Procedures........................................44
Item 16.       Reserved.......................................................45
    ITEM 16A.  AUDIT COMMITTEE FINANCIAL EXPERT...............................45
    ITEM 16B.  CODE OF ETHICS.................................................45
    ITEM 16C.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.........................45
    ITEM 16D.  EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.....46
    ITEM 16E.  PURCHASES OF EQUITY SECURITIES BY THE ISSUER
                   AND AFFILIATED PERSONS.....................................46
Item 17.       Financial Statements...........................................46
Item 18.       Financial Statements...........................................46

<PAGE>

            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain matters discussed herein may constitute forward-looking  statements. The
Private   Securities   Litigation  Reform  Act  of  1995  provides  safe  harbor
protections for  forward-looking  statements in order to encourage  companies to
provide prospective information about their business. Forward-looking statements
include  statements  concerning plans,  objectives,  goals,  strategies,  future
events or performance,  and underlying  assumptions and other statements,  which
are other than statements of historical facts.

The  Company  desires to take  advantage  of the safe harbor  provisions  of the
Private  Securities  Litigation  Reform  Act  of  1995  and  is  including  this
cautionary statement in connection with this safe harbor legislation.  The words
"believe,"  "anticipate,"  "intend," "estimate,"  "forecast," "project," "plan,"
"potential,"   "will,"  "may,"   "should,"   "expect,"   "pending"  and  similar
expressions identify forward-looking statements.

The forward-looking statements are based upon various assumptions, many of which
are based, in turn, upon further assumptions,  including without limitation, our
management's  examination of historical  operating trends, data contained in our
records and other data available  from third  parties.  Although we believe that
these  assumptions  were  reasonable  when made,  because these  assumptions are
inherently  subject to significant  uncertainties  and  contingencies  which are
difficult or impossible to predict and are beyond our control,  we cannot assure
you  that  we  will  achieve  or  accomplish  these  expectations,   beliefs  or
projections. We undertake no obligation to update any forward-looking statement,
whether as a result of new information, future events or otherwise.

Important  factors  that,  in our view,  could  cause  actual  results to differ
materially from those discussed in the  forward-looking  statements  include the
strength of world economies and currencies, general market conditions, including
fluctuations in charter rates and vessel values, changes in demand in the tanker
market,  as a result of changes in OPEC's petroleum  production levels and world
wide oil consumption and storage,  changes in our operating expenses,  including
bunker  prices,  drydocking  and  insurance  costs,  the market for our vessels,
availability of financing and  refinancing,  changes in  governmental  rules and
regulations or actions taken by regulatory authorities, potential liability from
pending or future  litigation,  general  domestic  and  international  political
conditions,  potential  disruption  of  shipping  routes  due  to  accidents  or
political  events,  vessels  breakdowns  and  instances of  off-hires  and other
important  factors  described  from  time to time in the  reports  filed  by the
Company with the Securities and Exchange Commission.

Please note in this annual report,  "we", "us",  "our",  and "The Company",  all
refer to Nordic American Tanker Shipping Limited and its subsidiaries.

<PAGE>

ITEM 1.     IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

            Not Applicable

ITEM 2.     OFFER STATISTICS AND EXPECTED TIMETABLE

            Not Applicable

ITEM 3.     KEY INFORMATION

     A.     SELECTED FINANCIAL DATA

The following  historical  financial  information  should be read in conjunction
with our audited  consolidated  financial  statements  and related  notes all of
which are included  elsewhere  in this  document and  "Operating  and  Financial
Review and  Prospects."  The statement of operations  data for each of the three
years ended December 31, 2003, 2004, and 2005 and selected balance sheet data as
of December 31, 2004 and 2005 are derived from our audited financial  statements
included  elsewhere in this document.  The statements of operations data for the
years ended  December  31, 2001 and 2002 and selected  balance  sheet data as of
December  31,  2001,  2002 and  2003 are  derived  from  our  audited  financial
statements not included in this document.

<PAGE>
<TABLE>

SELECTED FINANCIAL DATA
<CAPTION>

                                                                       December 31,
------------------------------------------------------------------------------------------------------------------------------------
All figures in USD                                         2005            2004            2003            2002            2001
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>             <C>             <C>             <C>             <C>
Voyage revenue                                         117,110,178      67,451,598      37,370,756      18,057,989      28,359,568
Voyage expenses                                        (30,980,916)     (4,925,353)       (184,781)       (184,781)       (184,781)
Vessel operating expense                               (11,220,770)     (1,976,766)              -               -               -
excl. depreciation expense presented below
Administrative expenses                                 (8,492,164)    (10,851,688)       (468,087)       (427,048)       (353,739)
Depreciation                                           (17,529,000)     (6,918,164)     (6,831,040)     (6,831,040)     (6,831,040)
------------------------------------------------------------------------------------------------------------------------------------
Net operating income                                    48,887,328      42,779,627      29,886,848      10,615,120      20,990,008
------------------------------------------------------------------------------------------------------------------------------------
Interest income                                            850,803         143,230          26,462          21,409         189,244
Interest expense                                        (3,453,963)     (1,971,304)     (1,797,981)     (1,764,424)     (1,769,000)
Other financial Income (Charges)                            33,574        (135,621)        (15,040)        (24,837)        (24,776)
------------------------------------------------------------------------------------------------------------------------------------
Net financial items                                     (2,569,586)     (1,963,695)     (1,786,559)     (1,767,852)     (1,604,532)
------------------------------------------------------------------------------------------------------------------------------------
Net profit                                              46,317,742      40,815,932      28,100,289       8,847,268      19,385,476
====================================================================================================================================
Basic and diluted earnings per share                          3.03            4.05            2.89            0.91            2.00
Cash dividends declared per share                             4.21            4.84            3.05            1.35            3.87
Weighted average shares outstanding basic and diluted   15,263,622      10,078,391       9,706,606       9,706,606       9,706,606

Other financial data:
Net cash from operating activities                      51,055,588      62,817,261      29,893,551      12,750,908      36,272,601
Dividend paid                                           64,279,487      47,195,842      29,605,410      13,103,993      37,564,658

Selected Balance Sheet Data (at period end):
Cash and cash equivalents                               14,240,482      30,732,516         565,924         277,783         630,868
Total assets                                           505,844,453     224,203,411     136,896,298     138,579,559     142,658,488
Total debt                                             130,000,000               0      30,000,000      30,000,000      30,000,000
Shareholders' equity                                   370,872,171     221,868,393     105,707,976     106,347,097     111,841,822

</TABLE>
<PAGE>

     B.     CAPITALIZATION AND INDEBTEDNESS
            Not Applicable

     C.     REASONS FOR THE OFFER AND USE OF PROCEEDS

            Not Applicable

     D.     RISK FACTORS

Some of the  following  risks  relate  principally  to the  industry in which we
operate and our  business in general.  Other  risks  relate  principally  to the
securities  market and ownership of our common stock.  The  occurrence of any of
the events described in this section could  significantly  and negatively affect
our  business,  financial  condition,  operating  results or cash  available for
dividends or the trading price of our common stock.

                         Industry Specific Risk Factors

The  cyclical  nature of the tanker  industry  may lead to  volatile  changes in
charter rates and vessel values which may adversely affect our earnings.

If the tanker market,  which has been cyclical,  is depressed in the future, our
earnings and  available  cash flow may  decrease.  Our ability to recharter  our
vessels or to sell them on the  expiration or  termination of their charters and
the charter rates payable under our two spot market related time  charters,  our
spot charters, or any renewal or replacement  charters,  will depend upon, among
other things, economic conditions in the tanker market.  Fluctuations in charter
rates and tanker  values result from changes in the supply and demand for tanker
capacity and changes in the supply and demand for oil and oil products.

The  factors  affecting  the supply and demand for  tankers  are  outside of our
control, and the nature, timing and degree of changes in industry conditions are
unpredictable.

        The factors that influence demand for tanker capacity include:

        o       demand for oil and oil products,

        o       supply of oil and oil products,

        o       regional availability of refining capacity,

        o       global and regional economic conditions,

        o       the distance oil and oil products are to be moved by sea, and

        o       changes in seaborne and other transportation patterns.

        The factors that influence the supply of tanker capacity include:

        o       the number of newbuilding deliveries,

        o       the scrapping rate of older vessels,

        o       conversion of tankers to other uses,

        o       the number of vessels that are out of service, and

        o       environmental concerns and regulations.

Historically,  the tanker  markets  have been  volatile  as a result of the many
conditions  and factors that can affect the price,  supply and demand for tanker
capacity.  Changes in demand for transportation of oil over longer distances and
supply  of  tankers  to  carry  that oil may  materially  affect  our  revenues,
profitability and cash flows.  Eight of our nine vessels are currently  operated
in the spot market or on spot market related time charters. We cannot assure you
that we will receive any minimum level of charterhire  for the vessels  operated
in the spot market or on spot market related time charters.

We will be dependent on spot  charters and any decrease in spot charter rates in
the future may adversely affect our earnings and our ability to pay dividends.

We currently operate a fleet of nine vessels,  including the vessel delivered to
us in April  2006.  Of those  nine  vessels,  one is on a long  term  fixed-rate
charter,  while  the  other  eight are  employed  in the spot  market or on time
charters with spot market  related  rates.  We are  currently  also pursuing the
acquisition  of a tenth vessel which we would also intend to spot charter in the
near term. Therefore we are highly dependent on spot market charter rates.

We may enter into spot charters for any  additional  vessels that we may acquire
in the future.  Although spot chartering is common in the tanker  industry,  the
spot charter market may fluctuate significantly based upon tanker and oil supply
and demand.  The successful  operation of our vessels in the spot charter market
depends  upon,  among other  things,  obtaining  profitable  spot  charters  and
minimizing,  to the extent  possible,  time spent  waiting for charters and time
spent traveling unladen to pick up cargo. The spot market is very volatile, and,
in the past,  there have been  periods when spot rates have  declined  below the
operating  cost of vessels.  We cannot assure you that future spot charters will
be  available  at rates  sufficient  to enable our  vessels  trading in the spot
market to operate profitably and to pay dividends.

Normally,  tanker markets are stronger in the fall and winter months (the fourth
and first  quarters of the  calendar  year) in  anticipation  of  increased  oil
consumption in the northern  hemisphere during the winter months.  Unpredictable
weather  patterns and  variations  in oil reserves  disrupt  tanker  scheduling.
Seasonal  variations  in tanker  demand and, as a result,  in charter rates will
affect any spot market related rates that we may receive.

Compliance  with  safety,   environmental  and  other   governmental  and  other
requirements may adversely affect our business.

The  shipping  industry  is  affected  by  numerous  regulations  in the form of
international  conventions,  national,  state and local  laws and  national  and
international  regulations in force in the  jurisdictions  in which such tankers
operate,  as well as in the  country  or  countries  in which such  tankers  are
registered.  These  regulations  include the U.S. Oil  Pollution Act of 1990, or
OPA, the International Convention on Civil Liability for Oil Pollution Damage of
1969, the  International  Convention for the Prevention of Pollution from Ships,
the IMO  International  Convention  for the  Safety  of Life at Sea of 1974,  or
SOLAS,  the  International  Convention on Load Lines of 1966 and the U.S. Marine
Transportation  Security  Act of  2002,  each of  which  imposes  environmental,
technical,  safety,  operational or financial  requirements  on us. In addition,
vessel  classification  societies  also  impose  significant  safety  and  other
requirements on our vessels. Regulation of vessels, particularly in the areas of
safety  and  environmental  impact  may  change in the  future and may limit our
ability to operate our business or require significant  capital  expenditures be
incurred on our vessels to keep them in compliance.

The value of our vessels may  fluctuate and could result in a lower price of our
common shares.

Tanker values have generally experienced high volatility.  You should expect the
market value of our oil tankers to fluctuate,  depending on general economic and
market  conditions  affecting  the tanker  industry and  competition  from other
shipping   companies,   types  and  sizes  of   vessels,   and  other  modes  of
transportation.  In addition,  as vessels grow older,  they generally decline in
value.  These  factors  will affect the value of our vessels.  Declining  tanker
values  could  affect  our  ability  to raise cash by  limiting  our  ability to
refinance our vessels, thereby adversely impacting our liquidity, or result in a
breach of our loan  covenants,  which could  result in  defaults  under our $300
million revolving credit facility,  or the New Credit facility.  If we determine
at any time that a vessel's  future limited useful life and earnings  require us
to impair its value on our financial  statements,  that could result in a charge
against our earnings and the reduction of our shareholders'  equity.  Due to the
cyclical  nature of the tanker  market,  if for any reason we sell  vessels at a
time when tanker  prices have fallen,  the sale may be at less than the vessel's
carrying amount on our financial statements,  with the result that we would also
incur a loss and a reduction in earnings.  Any such reduction  could result in a
lower share price.

Shipping is an inherently  risky business  involving  global  operations and our
vessels  are  exposed to  international  risks  which  could  reduce  revenue or
increase expenses.

Shipping companies conduct global operations.  Our vessels are at risk of damage
or loss because of events such as mechanical  failure,  collision,  human error,
war,  terrorism,  piracy,  cargo loss and bad  weather.  In  addition,  changing
economic,  regulatory  and  political  conditions in some  countries,  including
political and military conflicts,  have from time to time resulted in attacks on
vessels,  mining of waterways,  piracy,  terrorism,  labor strikes and boycotts.
These sorts of events could  interfere with shipping routes and result in market
disruptions.

Terrorist  attacks,  such as the attacks on the United  States on September  11,
2001, and other acts of violence or war may affect the financial markets and our
business, results of operations and financial condition.

Terrorist attacks such as the attacks on the United States on September 11, 2001
and the United  States'  continuing  response to these  attacks,  as well as the
threat of future terrorist  attacks,  continue to cause uncertainty in the world
financial markets, including the energy markets. The continuing conflict in Iraq
may lead to additional acts of terrorism,  armed conflict and civil  disturbance
around the world, which may contribute to further  instability  including in the
oil markets.  Terrorist attacks, such as the attack on the M.T. Limburg in Yemen
in  October  2002,  may also  negatively  affect  our  trade  patterns  or other
operations and directly  impact our vessels or our customers.  Future  terrorist
attacks could result in increased  volatility  of the  financial  markets in the
United  States and  globally  and could  result in an economic  recession in the
United  States or the  world.  Any of these  occurrences  could  have a material
adverse impact on our operating results, revenue and costs.

Arrests of our vessels by maritime  claimants could cause a significant  loss of
earnings for the related off-hire period.

Crew members, suppliers of goods and services to a vessel, shippers of cargo and
other  parties  may  be  entitled  to a  maritime  lien  against  a  vessel  for
unsatisfied  debts,  claims  or  damages.  In  many  jurisdictions,  a  maritime
lienholder  may enforce its lien by  "arresting" or "attaching" a vessel through
foreclosure proceedings.  The arrest or attachment of one or more of our vessels
could result in a significant  loss of earnings for the related off-hire period.
In  addition,  in  jurisdictions  where the "sister  ship"  theory of  liability
applies,  a claimant  may arrest the vessel  which is subject to the  claimant's
maritime  lien  and any  "associated"  vessel,  which  is any  vessel  owned  or
controlled by the same owner.  In countries with "sister ship"  liability  laws,
claims  might be asserted  against us or any of our vessels for  liabilities  of
other vessels that we own.

Governments  could  requisition our vessels during a period of war or emergency,
resulting in a loss of earnings.

A government could  requisition for title or seize our vessels.  Requisition for
title occurs when a government  takes control of a vessel and becomes its owner.
Also, a government could requisition our vessels for hire.  Requisition for hire
occurs when a government  takes control of a vessel and effectively  becomes its
charterer  at  dictated  charter  rates.  Although  we, as the  owner,  would be
entitled to compensation in the event of a requisition, the amount and timing of
payment would be uncertain.

                          Company Specific Risk Factors

We cannot guarantee that we will continue to make cash distributions.

We have made  distributions  quarterly since September 1997. It is possible that
our revenues  could be reduced as a result of decreases in charter rates or that
we could incur other  expenses or  contingent  liabilities  that would reduce or
eliminate the cash available for distribution as dividends.  The Credit Facility
prohibits  the  declaration  and payment of dividends if we are in default under
it. We refer you to Item 4--Information on the  Company--Business  Overview--Our
Credit  Facility for more details.  In addition,  the declaration and payment of
dividends  is subject at all times to the  discretion  of our Board of Directors
and  compliance  with Bermuda law, and may be dependent upon the adoption at the
annual meeting of shareholders  of a resolution  effectuating a reduction in our
share premium in an amount equal to the estimated amount of dividends to be paid
in  the   next   succeeding   year.   We   refer   you  to   Item   8--Financial
Information--Dividend Policy for more details. We cannot assure you that we will
pay dividends at rates previously paid or at all.

We may not be able to grow or to effectively manage our growth.

One of our  principal  strategies  is to  continue  to  grow  by  expanding  our
operations and adding to our fleet.  Our future growth will depend upon a number
of factors,  some of which may not be within our control.  These factors include
our ability to:

        o       identify   suitable   tankers  and/or  shipping   companies  for
                acquisitions,

        o       identify  businesses  engaged in  managing,  operating or owning
                tankers for acquisitions or joint ventures,

        o       integrate any acquired tankers or businesses  successfully  with
                our existing operations,

        o       hire,  train and retain  qualified  personnel and crew to manage
                and operate our growing business and fleet,

        o       identify additional new markets,

        o       improve our  operating,  financial  and  accounting  systems and
                controls, and

        o       obtain required financing for our existing and new operations.

Our failure to effectively identify, purchase, develop and integrate any tankers
or  businesses  could  adversely  affect our business,  financial  condition and
results of operations.  In addition,  in November 2004, we  transitioned  from a
bareboat  charter company to an operating  company.  We may incur  unanticipated
expenses as an operating  company.  The number of employees of Scandic  American
Shipping  Ltd.,  or the Manager,  that  perform  services for us and our current
operating and financial  systems may not be adequate as we implement our plan to
expand the size of our fleet,  and we may not be able to require  the Manager to
hire more employees or adequately  improve those systems.  In addition,  we have
incurred and will continue to incur expenses associated with compliance with the
Sarbanes-Oxley  Act of 2002.  Section 404 of that Act requires public  companies
include in annual  reports a report  containing  management's  assessment of the
effectiveness of the Company's  internal control over financial  reporting and a
related attestation of the Company's independent auditors. This requirement will
first apply to us with respect to the fiscal year ending  December 31, 2006.  We
have begun a comprehensive effort in preparation for compliance with Section 404
including the  documentation,  testing and review of our internal controls under
the direction of our management.  We cannot be certain at this time that all our
controls will be considered effective. Therefore, we can give no assurances that
our internal  control over  financial  reporting will satisfy the new regulatory
requirements  when they become  applicable to us. If our independent  auditor is
unable to provide us with an unqualified attestation report on a timely basis as
required by Section 404,  investors  could lose confidence in the reliability of
our financial  statements,  which could result in a decrease in the value of our
common stock.  Finally,  acquisitions may require additional equity issuances or
debt issuances (with amortization payments), each of which could lower dividends
per share.  If we are unable to execute the points  noted above,  our  financial
condition and dividend rates may be adversely affected.

We are  dependent on the Manager and there may be conflicts of interest  arising
from the relationship between our Chairman and the Manager.

Our success  depends to a  significant  extent upon the abilities and efforts of
the Manager and our  management  team.  Our success will depend upon our and the
Manager's  ability to hire and retain key members of our  management  team.  The
loss of any of these individuals  could adversely affect our business  prospects
and financial  condition.  Difficulty in hiring and  retaining  personnel  could
adversely  affect our results of  operations.  We do not maintain "key man" life
insurance on any of our officers.

Herbjorn Hansson,  our Chairman,  President and Chief Executive Officer, is also
an owner of the Manager.  In addition,  one of our directors is also an owner of
the  Manager.  The  Manager may engage in  business  activities  other than with
respect to the Company.  The fiduciary duty of a director may compete with or be
different from the interests of the Manager and may create conflicts of interest
in relation to that director's duties to the Company.

An  increase  in  operating  costs  could  adversely  affect  our cash  flow and
financial condition.

Under the original bareboat charters to BP Shipping, BP Shipping was responsible
for our vessels' operating and voyage costs. Under the time and spot charters of
eight of our nine vessels, we are responsible for many of such costs. Our vessel
operating expenses include the costs of crew, fuel (for spot chartered vessels),
provisions, deck and engine stores, insurance and maintenance and repairs, which
depend on a variety of factors,  many of which are beyond our  control.  Some of
these costs,  primarily  relating to insurance  and enhanced  security  measures
implemented  after September 11, 2001 and fuel, have been increasing.  The price
of fuel is near  historical  high levels and may increase in the future.  If our
vessels  suffer damage,  they may need to be repaired at a drydocking  facility.
The costs of drydock repairs are unpredictable and can be substantial. Increases
in any of these costs would decrease earnings and dividends per share.

Our vessels operate in the highly competitive international tanker market.

The  operation  of tanker  vessels  and  transportation  of crude and  petroleum
products is  extremely  competitive.  Competition  arises  primarily  from other
tanker  owners,  including  major oil  companies as well as  independent  tanker
companies,  some of whom have substantially  greater resources.  Competition for
the  transportation of oil and oil products can be intense and depends on price,
location,  size,  age,  condition  and the  acceptability  of the tanker and its
operators to the  charterers.  We will have to compete with other tanker owners,
including major oil companies as well as independent tanker companies.

Our  market  share may  decrease  in the  future.  We may not be able to compete
profitably as we expand our business into new geographic  regions or provide new
services. New markets may require different skills, knowledge or strategies than
we use in our current markets, and the competitors in those new markets may have
greater financial strength and capital resources than we do.

Purchasing and operating  secondhand  vessels may result in increased  operating
costs which could adversely affect our earnings and as our fleet ages, the risks
associated with older vessels could adversely affect our operations.

Our current business strategy includes additional growth through the acquisition
of new and  secondhand  vessels.  The ninth  vessel that we took  delivery of in
early April 2006 is secondhand.  Further,  we are pursuing the  acquisition of a
tenth secondhand modern double-hull  Suezmax tanker.  While we typically inspect
secondhand  vessels  prior to  purchase,  this does not provide us with the same
knowledge about their condition that we would have had if these vessels had been
built for and  operated  exclusively  by us.  Generally,  we do not  receive the
benefit of  warranties  from the  builders  for the  secondhand  vessels that we
acquire.

In general,  the costs to maintain a vessel in good operating condition increase
with the age of the vessel. Older vessels are typically less fuel-efficient than
more recently  constructed  vessels due to  improvements  in engine  technology.
Cargo  insurance  rates increase with the age of a vessel,  making older vessels
less desirable to charterers.

Governmental regulations, safety or other equipment standards related to the age
of vessels may require  expenditures  for  alterations,  or the  addition of new
equipment,  to our vessels and may restrict the type of  activities in which the
vessels  may  engage.  We  cannot  assure  you that as our  vessels  age  market
conditions  will justify those  expenditures or enable us to operate our vessels
profitably during the remainder of their useful lives.

Servicing debt which we may incur in the future would limit funds  available for
other purposes and if we cannot service our debt, we may lose our vessels.

Borrowing  under the New Credit  Facility  requires us to dedicate a part of our
cash flow from operations to paying interest on our indebtedness. These payments
limit  funds  available  for working  capital,  capital  expenditures  and other
purposes,  including making  distributions to shareholders and further equity or
debt financing in the future.  Amounts  borrowed  under the New Credit  Facility
bear interest at variable  rates.  Increases in prevailing  rates could increase
the  amounts  that  we  would  have  to pay  to our  lenders,  even  though  the
outstanding principal amount remains the same, and our net income and cash flows
would  decrease.  We expect our earnings and cash flow to vary from year to year
due to the cyclical  nature of the tanker  industry.  In  addition,  our current
policy is not to accumulate cash, but rather to distribute our available cash to
shareholders.  If we do not generate or reserve enough cash flow from operations
to satisfy our debt obligations,  we may have to undertake alternative financing
plans, such as:

        o       seeking to raise additional capital,

        o       refinancing or restructuring our debt,

        o       selling tankers or other assets, or

        o       reducing or delaying capital investments.

However, these alternative financing plans, if necessary,  may not be sufficient
to  allow us to meet our debt  obligations.  If we are  unable  to meet our debt
obligations  or if some other  default  occurs  under the Credit  Facility,  the
lenders  could elect to declare that debt,  together  with accrued  interest and
fees,  to be  immediately  due and payable and  proceed  against the  collateral
securing that debt, which  constitutes our entire fleet and substantially all of
our assets.

Our New  Credit  Facility  contains  restrictive  covenants  which may limit our
liquidity and corporate activities.

The New Credit  Facility  imposes  operating and financial  restrictions  on us.
These restrictions may limit our ability to:

        o       pay dividends and make capital  expenditures  if we do not repay
                amounts  drawn  under  the New  Credit  Facility  or if there is
                another default under the New Credit Facility,

        o       incur  additional   indebtedness,   including  the  issuance  of
                guarantees,

        o       create liens on our assets,

        o       change the flag, class or management of our vessels or terminate
                or materially  amend the management  agreement  relating to each
                vessel,

        o       sell our vessels,

        o       merge or consolidate  with, or transfer all or substantially all
                our assets to, another person, or

        o       enter into a new line of business.

Therefore, we may need to seek permission from our lenders in order to engage in
some corporate actions. Our lenders' interests may be different from ours and we
cannot  guarantee  that we will be able to obtain our lenders'  permission  when
needed.  This may limit our ability to pay dividends to you,  finance our future
operations  or  capital  requirements,  make  acquisitions  or  pursue  business
opportunities.

Shipping is an inherently  risky  business and our insurance may not be adequate
to cover all our losses.

There  are a  number  of risks  associated  with the  operation  of  ocean-going
vessels,  including mechanical failure,  collision, human error, war, terrorism,
property loss,  cargo loss or damage and business  interruption due to political
circumstances in foreign countries,  hostilities and labor strikes. Any of these
events may result in loss of revenues, increased costs and decreased cash flows.
In addition,  the operation of any vessel is subject to the inherent possibility
of marine disaster,  including oil spills and other environmental  mishaps,  and
the  liabilities  arising  from owning and  operating  vessels in  international
trade. We cannot assure investors that our insurance will protect us against all
risks. We may not be able to maintain adequate  insurance coverage at reasonable
rates  for our  fleet in the  future  and the  insurers  may not pay  particular
claims.  For example,  a catastrophic  spill could exceed our insurance coverage
and have a material adverse effect on our financial condition.  In the past, new
and stricter  environmental  regulations  have led to higher costs for insurance
covering  environmental  damage or pollution,  and new regulations could lead to
similar increases or even make this type of insurance unavailable.  Furthermore,
even if insurance  coverage is adequate to cover our losses,  we may not be able
to  timely  obtain a  replacement  ship in the  event of a loss.  We may also be
subject  to  calls,  or  premiums,  in  amounts  based not only on our own claim
records but also the claim  records of all other members of the  protection  and
indemnity associations through which we receive indemnity insurance coverage for
tort liability.  Our payment of these calls could result in significant expenses
to us which could reduce our cash flows and place  strains on our  liquidity and
capital resources.

Because some of our expenses are incurred in foreign currencies,  we are exposed
to exchange rate risks.

The charterers of our vessels pay us in U.S. dollars. While we incur most of our
expenses  in U.S.  dollars,  we have in the  past  incurred  expenses  in  other
currencies, most notably the Norwegian Kroner. Declines in the value of the U.S.
dollar  relative to the Norwegian  Kroner,  or the other  currencies in which we
incur expenses, would increase the U.S. dollar cost of paying these expenses and
thus would adversely affect our results of operations.

We may have to pay tax on United  States source  income,  which would reduce our
earnings.

Under the United States  Internal  Revenue Code of 1986, or the Code, 50% of the
gross  shipping  income of a vessel  owning or chartering  corporation,  such as
ourselves, attributable to transportation that begins or ends, but that does not
both begin and end, in the U.S. will be  characterized  as U.S.  source shipping
income and such income will be subject to a 4% United States  federal income tax
unless that  corporation  is entitled to a special tax exemption  under the Code
which applies to the international shipping income derived by certain non-United
States corporations. We believe that we currently qualify for this statutory tax
exemption and we will take this position for U.S. tax return reporting purposes.
However, there are several risks that could cause us to become taxed on our U.S.
source shipping income. Due to the factual nature of the issues involved, we can
give no assurances on our tax-exempt status.

If we are not entitled to this  statutory tax exemption for any taxable year, we
would be subject for any such year to a 4% United States  federal  income tax on
our U.S.  source  shipping  income.  The  imposition  of this tax  could  have a
negative effect on our business and would result in decreased earnings available
for distribution to our shareholders.

If U.S.  tax  authorities  were to treat  us as a  "passive  foreign  investment
company," that could have adverse consequences on U.S.
holders.

A foreign  corporation will be treated as a "passive foreign investment company"
for U.S.  Federal  income tax  purposes  if either (1) at least 75% of its gross
income for any taxable year  consists of certain  types of "passive  income," or
(2) at least 50% of the average value of the  corporation's  assets produce,  or
are held for the production of, such types of "passive  income." For purposes of
these tests, "passive income" includes dividends,  interest,  and gains from the
sale or exchange of investment property and rents and royalties other than rents
and royalties  which are received from unrelated  parties in connection with the
active conduct of trade or business. For purposes of these tests, income derived
from the  performance  of services does not constitute  "passive  income." Those
holders of stock in a passive  foreign  investment  company who are  citizens or
residents  of the United  States or domestic  entities  would  alternatively  be
subject to a special adverse U.S.  Federal income tax regime with respect to the
income derived by the passive foreign investment company, the distributions they
receive from the passive foreign  investment  company and the gain, if any, they
derive from the sale or other disposition of their shares in the passive foreign
investment company. In particular,  dividends paid by us would not be treated as
"qualified  dividend income" eligible for preferential tax rates in the hands of
noncorporate U.S. shareholders.

Based on our current and expected future  operations,  we believe that we are no
longer a passive  foreign  investment  company  with respect to the taxable year
2005 and  thereafter.  As a result,  noncorporate  U.S.  shareholders  should be
eligible to treat  dividends  paid by us in 2006 and  thereafter  as  "qualified
dividend  income" which is subject to  preferential  tax rates  (through  2010).
Since we expect to derive  more than 25% of our  income  each year from our time
chartering and voyage chartering activities, we believe that such income will be
treated for relevant U.S. Federal income tax purposes as services income, rather
than rental income. Correspondingly,  such income should not constitute "passive
income,"  and  the  assets  that we own  and  operate  in  connection  with  the
production of that income (which should  constitute  more than 50% of our assets
each year), in particular our vessels,  should not constitute passive assets for
purposes of determining  whether we are a passive foreign  investment company in
any taxable year.  However,  no assurance can be given that the Internal Revenue
Service  will accept this  position  or that we would not  constitute  a passive
foreign  investment  company  for any  future  taxable  year if there were to be
changes in the nature and extent of our operations.

                      Risks Relating to Our Common Shares

Our common  share price may be highly  volatile  and future  sales of our common
shares could cause the market price of our common shares to decline.

The market price of our common shares has  historically  fluctuated  over a wide
range and may continue to fluctuate  significantly  in response to many factors,
such as actual or anticipated  fluctuations in our operating results, changes in
financial  estimates by securities  analysts,  economic and  regulatory  trends,
general market  conditions,  rumors and other factors,  many of which are beyond
our  control.  Investors  in our common  shares may not be able to resell  their
shares at or above their purchase price due to those factors,  which include the
risks and uncertainties set forth in this annual report.

Because we are a foreign  corporation,  you may not have the same  rights that a
shareholder in a U.S. corporation may have.

We are a Bermuda  exempted  company.  Our memorandum of association and bye-laws
and The  Companies  Act,  1981 of  Bermuda,  or the  Companies  Act,  govern our
affairs.  The  Companies Act does not as clearly  establish  your rights and the
fiduciary  responsibilities  of  our  directors  as  do  statutes  and  judicial
precedent in some U.S. jurisdictions. Therefore, you may have more difficulty in
protecting  your  interests  as a  shareholder  in the  face of  actions  by the
management,  directors or controlling  shareholders than would shareholders of a
corporation  incorporated in a United States jurisdiction.  There is a statutory
remedy under Section 111 of the Companies Act which  provides that a shareholder
may seek redress in the courts as long as such  shareholder  can establish  that
our affairs are being conducted,  or have been conducted, in a manner oppressive
or prejudicial to the interests of some part of the shareholders, including such
shareholder.  However,  the principles  governing Section 111 have not been well
developed.

It may not be possible for our investors to enforce U.S. judgments against us.

We are incorporated in the Islands of Bermuda.  Substantially  all of our assets
and those of our  subsidiaries  are  located  outside  the United  States.  As a
result,  it may be difficult or impossible  for U.S.  investors to serve process
within  the  United  States  upon us or to  enforce  judgment  upon us for civil
liabilities in U.S.  courts.  In addition,  you should not assume that courts in
the countries in which we are  incorporated  or where our assets are located (1)
would enforce  judgments of U.S.  courts  obtained in actions against based upon
the civil liability  provisions of applicable U.S.  federal and state securities
laws or (2) would enforce,  in original  actions,  liabilities  against us based
upon these laws.

ITEM 4.     INFORMATION ON THE COMPANY

     A.     HISTORY AND DEVELOPMENT OF THE COMPANY

Nordic American Tanker Shipping Limited, or the Company, was founded on June 12,
1995 under the laws of the  Islands of Bermuda  and we  maintain  our  principal
offices at  Thistle  House,  4 Burnaby  Street,  Hamilton  HM 11,  Bermuda.  Our
telephone number at such address is (441) 292-7202.

The Company was formed for the purpose of acquiring and chartering three Suezmax
tankers that were built in 1997. These three vessels were bareboat  chartered to
BP Shipping  Ltd.,  or BP  Shipping,  for a period of seven  years.  BP Shipping
redelivered  these  three  vessels to us in  September  2004,  October  2004 and
November 2004,  respectively.  We have  continued  contracts with BP Shipping by
time  chartering to it two of our original  vessels at spot market related rates
for  three-year  terms up to the autumn of 2007. We have bareboat  chartered the
third of our  original  three  vessels to Gulf  Navigation  Company LLC, or Gulf
Navigation,  of  Dubai,  U.A.E.  for a term of  five  years  at a fixed  rate of
charterhire,  subject to two one-year extensions at Gulf Navigation's option. We
acquired  our fourth  vessel in November  2004,  our fifth and sixth  vessels in
March 2005,  our seventh  vessel in August 2005,  our eighth  vessel in November
2005 and our ninth vessel in April 2006.  We currently  operate eight vessels in
the spot market or on spot market related time charters.

     B.     BUSINESS OVERVIEW

Our Fleet

Our fleet,  including  the  additional  vessel we have  acquired  in April 2006,
consists  of nine  modern  double-hull  Suezmax  tankers.  The  following  chart
provides information regarding each vessel, including its employment status.

<TABLE>
                                 Year                Employment Status
Vessel               Yard        Built     Dwt       (Expiration Date)       Flag
----------------------------------------------------------------------------------------
<S>                 <C>          <C>     <C>        <C>                       <C>
Gulf Scandic        Samsung      1997    151,459    Bareboat   (Nov. 2009)    Isle of Man
Nordic Hawk         Samsung      1997    151,459    TC/Spot(1) (Oct. 2007)    Bahamas
Nordic Hunter       Samsung      1997    151,459    TC/Spot(1) (Sep. 2007)    Bahamas
Nordic Voyager      Dalian New   1997    149,591    Spot                      Norway
Nordic Freedom      Daewoo       2005    159,500    Spot       (Mar. 2007)    Bahamas
Nordic Fighter      Hyundai      1998    153,181    Spot                      Norway
Nordic Discovery    Hyundai      1998    153,181    Spot                      Norway
Nordic Saturn       Daewoo       1998    157,332    Spot                      Marshall Islands
Nordic Jupiter(2)   Daewoo       1998    157,332    Spot                      Marshall Islands

        (1) TC/Spot = Time Charter on spot market related terms.
        (2) The vessel was delivered to us on April 10, 2006.
</TABLE>

Our Charters

We operate our  vessels on  bareboat  charters,  time  charters  and in the spot
market. Our goal is to take advantage of potentially higher market rates through
time charters with spot market related rates and voyage charters.  Including our
recent  acquisition,  we plan to operate  eight of our nine  vessels in the spot
market  or on spot  market  related  time  charters,  although  we may  consider
charters at fixed rates depending on market conditions.

Bareboat Charters

We have chartered one of our vessels (the Gulf Scandic) under a bareboat charter
to Gulf  Navigation,  for a period  of five  years,  terminating  in the  fourth
quarter of 2009, subject to two one-year extensions at Gulf Navigation's option.
Under the terms of the bareboat  charter,  Gulf Navigation is obligated to pay a
fixed  charterhire  of  $17,325  per day  for the  entire  charter  period.  The
charterhire  is payable to us monthly in advance.  Under certain  circumstances,
including in the event the vessel is lost,  the bareboat  charter will be deemed
terminated and Gulf Navigation will not be obligated to pay the charterhire.

During the charter  period,  Gulf  Navigation  will generally be responsible for
operating and  maintaining  the vessel and will bear all costs and expenses with
respect  to the  vessel.  During  the  bareboat  charter  period,  we  have  the
responsibility  to insure the vessel at our expense  against hull and  machinery
and war risks. However, Gulf Navigation is required to insure against protection
and  indemnity  risks.  Upon  the  expiration  of  the  bareboat  charter,  Gulf
Navigation is required to redeliver the vessel in the same or as good structure,
state, condition and class as that in which the vessel was delivered,  fair wear
and tear not affecting class excepted.

Under the terms of the bareboat charter, Gulf Navigation has agreed to indemnify
us  against  any loss,  damage or  expense  incurred  by us  arising  out of the
operation of the vessel by Gulf  Navigation  and against any lien arising out of
an event occurring during the charter period.

Time Charters

We have  chartered  two of our vessels  (the Nordic Hawk and the Nordic  Hunter)
under spot market  related  time  charters to BP Shipping  for a period of three
years each,  terminating between September 1 and October 31, 2007. The amount of
charterhire  payable  under the  charters  to BP  Shipping is based on a formula
designed to generate  earnings  to us as if we had  operated  the vessels in the
spot  market  on two  routes  used  for the  calculation,  less  5%.  Since  the
charterhire paid to us will be based on this formula,  at times, the charterhire
payable may be higher or lower than rates achieved by other tanker  operators in
the spot market  operating on these or other routes.  The charterhire is payable
to us monthly.

Under the time charters,  BP Shipping is generally  responsible for, among other
things,  the  cost of all  fuels  with  respect  to the  vessels  (with  certain
exceptions,  including during off-hire periods), port charges, and costs related
to towage,  pilotage,  mooring loading and discharging  facilities and services.
Under time charters, we are generally required,  among other things, to keep the
related  vessel  seaworthy,  to crew and  maintain the vessel and to comply with
applicable  regulations.  We are also  required  to insure  the  related  vessel
against  protection and indemnity  risks,  hull and machinery and war risks, and
provide  standard oil pollution  insurance cover. If any off-hire period exceeds
thirty  consecutive  days,  BP Shipping  will have the option to  terminate  the
charter.

Spot Charters

We currently  operate one vessel (the Nordic  Freedom) in the spot market (other
than in a pool).  Tankers  operating in the spot market  typically are chartered
for a single voyage which may last up to several weeks. Tankers operating in the
spot market may generate increased profit margins during  improvements in tanker
rates,  while tankers operating  fixed-rate time charters generally provide more
predictable cash flows.

Under a typical  voyage  charter in the spot market,  we will be paid freight on
the basis of moving  cargo from a loading port to a discharge  port.  We will be
responsible  for paying both operating  costs and voyage costs and the charterer
will be  responsible  for any delay at the loading or discharging  ports.  Under
voyage  charters,  we are generally  required,  among other things,  to keep the
related  vessel  seaworthy,  to crew and  maintain the vessel and to comply with
applicable regulations.

Pooling Arrangements

We currently operate five of our vessels (the Nordic Voyager,  Nordic Discovery,
Nordic  Fighter,  Nordic  Saturn and Nordic  Jupiter) in spot market  pools with
other  vessels  that are not owned by us. The pools are  managed by third  party
pool administrators.  The pool administrator of each pool has the responsibility
for the  commercial  management  of the  participating  vessels,  including  the
marketing,  chartering, operation and bunker (fuel oil) purchase of the vessels.
The pool  participants  remain  responsible  for all other costs  including  the
financing,  insurance,  manning and technical  management of their vessels.  The
earnings of all of the vessels are aggregated,  or pooled, and divided according
to the relative  performance  capabilities  of the vessel and the actual earning
days each vessel is available.

The Management Agreement

Under the Management  Agreement by and between the Company and Scandic  American
Shipping Ltd., or the Manager,  the Manager  assumes  commercial and operational
responsibility of our vessels and is required to manage our day-to-day  business
subject, always, to our objectives and policies as established from time to time
by the Board of Directors.  The Manager sub-contracts certain of these duties to
Teekay  Marine  Services AS  (formerly  IUM  Shipmanagement  AS), a  third-party
technical manager affiliated with Teekay Shipping Corporation, a publicly traded
shipping company. All decisions of a material nature concerning our business are
reserved to our Board of Directors.  The  Management  will terminate on June 30,
2019,  unless earlier  terminated  pursuant to its terms, as discussed below, or
extended by the parties following mutual agreement.

For its  services  under the  Management  Agreement,  the Manager is entitled to
cover its costs incurred plus a management fee equal to $100,000 per annum.  The
management  fee is payable to the Manager  quarterly in advance.  The Management
Agreement  formerly  provided  that the Manager would receive 1.25% of any gross
charterhire  paid to us. In order to further align the Manager's  interests with
those  of the  Company,  the  Manager  agreed  with us to amend  the  Management
Agreement to eliminate  this  payment,  and we issued to the Manager  restricted
common shares equal to 2% of our outstanding  common shares. Any time additional
common shares are issued, the Manager will receive additional  restricted common
shares to maintain  the number of common  shares  issued to the Manager at 2% of
our total outstanding common shares. These restricted shares are nontransferable
for three years from issuance.

Under the Management  Agreement,  the Manager pays,  and receives  reimbursement
from us, for our administrative expenses including such items as:

        o       all  costs  and  expenses  incurred  on  our  behalf,  including
                operating   expenses  and  other  costs  for  vessels  that  are
                chartered  out on time charters or traded in the spot market and
                for  monitoring  the  condition  of our vessel that is operating
                under bareboat charter,

        o       executive officer and staff salaries,

        o       administrative  expenses,  including,  among  others,  for third
                party   public   relations,   insurance,   franchise   fees  and
                registrars' fees,

        o       all premiums for insurance of any nature,  including  directors'
                and  officers'   liability   insurance  and  general   liability
                insurance,

        o       brokerage  commissions  payable by us on the gross  charter hire
                received in connection with the charters,

        o       directors' fees and meeting expenses,

        o       audit fees,

        o       other expenses approved by the Board of the Directors and

        o       attorneys'  fees  and  expenses,   incurred  on  our  behalf  in
                connection with (A) any litigation commenced by or against us or
                (B) any claim or investigation by any  governmental,  regulatory
                or self-regulatory authority involving us.

We have agreed to defend,  indemnify  and save the  Manager  and its  affiliates
(other than us and our subsidiaries),  officers, directors, employees and agents
harmless from and against any and all loss, claim,  damage,  liability,  cost or
expense,  including  reasonable  attorneys' fees, incurred by the Manager or any
such affiliates  based upon a claim by or liability to a third party arising out
of  the  operation  of  our  business,  unless  due to  the  Manager's  or  such
affiliates' negligence or willful misconduct.

        We may terminate the Management Agreement in the event that:

        o       the  Manager  commits  any  material  breach or  omission of its
                material  obligations  or  undertakings  thereunder  that is not
                remedied within thirty days of our notice to the Manager of such
                breach or omission,

        o       the Manager fails to maintain adequate  authorization to perform
                its duties thereunder that is not remedied within thirty days,

        o       certain events of the Manager's bankruptcy occur, or

        o       it becomes  unlawful for the Manager to perform its duties under
                the Management Agreement.

Commercial and Technical Management Agreements

We have entered into a commercial  management  agreement with Teekay  Chartering
Limited,  or Teekay, an affiliate of Teekay Shipping  Corporation for the Nordic
Freedom.  Under the supervision of the Manager,  Teekay's duties include seeking
and negotiating charters for this vessel.

We have entered into a commercial  management  agreement  with the Swedish based
Stena Bulk AS, or Stena,  for the Nordic  Voyager,  which is  operated in a pool
with  other  Stena-controlled  Suezmax  tankers.  Under the  supervision  of the
Manager, Stena's duties in the pool include seeking and negotiating charters for
this vessel.

We have entered into a commercial management agreement with Frontline Management
ASA, or Frontline,  for the Nordic Fighter and the Nordic  Discovery,  which are
operated in a pool with other Frontline  controlled  Suezmax tankers.  Under the
supervision of the Manager,  Frontline's  duties in the pool include seeking and
negotiating charters for these vessels.

We have entered into a commercial  management  agreement with the U.S. based OMI
Corporation,  or OMI,  for the  Nordic  Saturn  and  Nordic  Jupiter,  which are
operated  in a  pool  with  other  OMI-controlled  Suezmax  tankers.  Under  the
supervision  of the  Manager,  OMI's  duties  in the pool  include  seeking  and
negotiating  charters  for  these  vessels.  We have  entered  into a  technical
management  agreement  for Nordic  Jupiter  with OMI Marine  Services  under the
supervision of the Manager.

We have  entered  into a technical  management  agreement  for the Nordic  Hawk,
Nordic  Hunter,  Nordic  Voyager,  Nordic  Freedom and Nordic Saturn with Teekay
Marine Services AS (formerly IUM Shipmanagement AS) under the supervision of the
Manager.

We have entered into a technical management agreement for the Nordic Fighter and
the Nordic  Discovery  with V.Ships  Norway AS, or V.Ships.  V.Ships is a marine
service group that provides ship  management  and related  services to a managed
fleet of approximately 650 vessels worldwide.

Compensation  under the  commercial  and technical  management  agreements is in
accordance with industry standards.

Our Credit Facility

In September 2005, we entered into a new $300 million revolving credit facility,
which we refer to as the New Credit  Facility.  The New Credit  Facility  became
effective as of October 2005 and replaced  our  previous  credit  facility  from
October  2004,  a portion  of which was set to mature in October  2005.  The New
Credit Facility will mature in September 2010.

The New Credit  Facility  provides  funding for future vessel  acquisitions  and
general  corporate  purposes.  The New Credit  Facility cannot be reduced by the
lender and there is no repayment  obligation  of the  principal  during the five
year term.  Amounts  borrowed  under the New Credit  Facility bear interest at a
rate equal to LIBOR plus a margin  between 0.7% and 1.2%  (depending on the loan
to vessel value ratio).  We must pay a commitment  fee of 30% of the  applicable
margin on any undrawn amounts.

In September  2005, we borrowed $60.0 million under our previous credit facility
to finance part of the purchase  price of our seventh vessel that we acquired in
August 2005, and $7.0 million to finance the down payment for the acquisition of
our eighth vessel.

In October  2005,  we  refinanced  the  borrowings  of $67.0  million  under our
previous  credit  facility  by drawing on our New Credit  Facility.  In November
2005, we borrowed $63.0 million under our New Credit Facility to finance part of
the purchase price or our eighth vessel that we acquired in September  2005. Our
aggregate  borrowings  under our New Credit  Facility  are $130.0  million as of
December 31, 2005.

Borrowings  under the New Credit  Facility  are  secured by  mortgages  over our
existing  and new  vessels  and  assignments  of earnings  and  insurances,  and
drawings  will be  available  subject  to loan to vessel  value  ratios.  We are
subject to mandatory prepayment upon the occurrence of certain events. The terms
and  conditions  of the New Credit  Facility  require  compliance  with  certain
restrictive  covenants,  which  we feel  are  consistent  with  loan  facilities
incurred by other shipping  companies.  Under the New Credit  Facility,  we are,
among other things, required to:

        o       maintain certain loan to vessel value ratios,

        o       maintain a book equity of no less than $150.0 million,

        o       remain listed on a recognized stock exchange, and

        o       obtain the consent of the lenders prior to creating  liens on or
                disposing of our vessels.

The New Credit Facility provides that we may not pay dividends if following such
payment we would not be in compliance with certain financial  covenants or there
is a default under the New Credit Facility.

The International Tanker Market

International  seaborne oil and petroleum products  transportation  services are
mainly  provided by two types of  operators:  major oil company  captive  fleets
(both private and state-owned) and independent  shipowner fleets.  Both types of
operators  transport oil under  short-term  contracts  (including  single-voyage
"spot  charters") and long-term  time charters with oil companies,  oil traders,
large oil consumers,  petroleum product producers and government  agencies.  The
oil companies own, or control through long-term time charters, approximately one
third of the current world tanker capacity,  while independent  companies own or
control the balance of the fleet. The oil companies use their fleets not only to
transport their own oil, but also to transport oil for third-party charterers in
direct  competition with independent  owners and operators in the tanker charter
market.

The oil  transportation  industry has historically been subject to regulation by
national authorities and through international  conventions.  Over recent years,
however, an environmental  protection regime has evolved which has a significant
impact  on the  operations  of  participants  in the  industry  in the  form  of
increasingly  more  stringent  inspection  requirements,  closer  monitoring  of
pollution-related  events, and generally higher costs and potential  liabilities
for the owners and operators of tankers.

In order to benefit from economies of scale,  tanker  charterers  will typically
charter the largest  possible  vessel to transport  oil or products,  consistent
with port and canal  dimensional  restrictions  and optimal  cargo lot sizes.  A
tanker's  carrying capacity is measured in deadweight tons, or dwt, which is the
amount of crude oil  measured  in metric  tons  that the  vessel is  capable  of
loading. The oil tanker fleet is generally divided into the following five major
types of  vessels,  based on vessel  carrying  capacity:  (i) Ultra  Large Crude
Carrier (ULCC) - with a size range of approximately 320,000 to 450,000 dwt; (ii)
Very Large Crude Carrier  (VLCC) with a size range of  approximately  200,000 to
320,000 dwt; (iii) Suezmax-size  range of approximately  120,000 to 200,000 dwt;
(iv) Aframax-size range of approximately 80,000 to 120,000 dwt; (v) Panamax-size
range of approximately  60,000 to 70,000 dwt; and (v) small tankers of less than
approximately  60,000  dwt.  ULCCs and VLCCs  typically  transport  crude oil in
long-haul  trades,  such as from the Arabian Gulf to  Rotterdam  via the Cape of
Good Hope.  Suezmax tankers also engage in long-haul crude oil trades as well as
in medium-haul  crude oil trades,  such as from West Africa to the East Coast of
the United States.  Aframax-size  vessels  generally  engage in both  medium-and
short-haul  trades of less than  1,500  miles and carry  crude oil or  petroleum
products.  Smaller tankers mostly transport  petroleum products in short-haul to
medium-haul trades.

The Tanker Market 2005

For the third year in a row the tanker  market  was very  profitable  for tanker
owners.  Even though 2005 was not as robust as 2004 for crude  carriers,  it was
the second best year since the 1970s. In the single voyage market, VLCCs reached
an average of $55,000 per day, down from the  extraordinary  high of $89,000 the
year  before.  Suezmaxes  achieved  $48,000  per day,  versus  $65,000  in 2004.
Corresponding rates for Aframaxes were $40,000 compared with $47,000 in 2004.

Estimates  indicate an increase in seaborne  oil trade of 3.5% from 2004 to 2005
and a slight reduction in average transport distance. Based on industry reports,
there was an increase in waiting  time in ports and  straits  compared  with the
year  before,  leading  to a  decline  in the  productivity  of the  fleet.  Our
preliminary  estimates  show an  overall  growth of 3% to 4% in  tanker  tonnage
demand from 2004 to 2005.

The tanker fleet,  excluding chemical tankers,  rose at the highest rate in many
years on a dwt basis,  with  deliveries of 28 million dwt,  while  scrapping and
other  removals  amounted to no more than 5 million dwt.  Fleet growth by dwt in
2005 was as high as 7%, resulting in a drop in the fleet's utilization rate from
91.5% in 2004 to 88.5% in 2005.

The most important  trend in the global oil market in 2005 was the stagnation in
oil production  outside OPEC.  Hurricane-related  supply disruptions in the U.S.
Gulf,  higher than  anticipated  North Sea  depletion  rates and a more moderate
growth in Russian oil output were the main  elements  behind the  stagnation  of
non-OPEC production.

The  consequence of less oil from non-OPEC  sources was an increased  demand for
OPEC oil. Since OPEC was already producing at almost full capacity,  most of the
extra demand  resulted in higher prices.  Lack of spare oil production  capacity
drove crude oil prices to, at its peak,  above $70 per barrel and  dampened  the
extremely  strong growth in oil  consumption of close to 4% in 2004 to only 1.3%
in 2005, according to the most recent estimates.

The sale and purchase market for tankers was strong in 2005, especially for very
modern   tankers.   Values  for  double  hull   tankers   increased  on  average
approximately  7.5%,  whereas  values for single  hull  tankers on average  fell
approximately 10%.

According to the January 2005 Oil and Gas Journal,  the Middle East has 57.1% of
the world's  proven oil  reserves,  which will continue to drive long and medium
haul seaborne transportation.  World oil production reached 84.6 million barrels
per day in January  2006.  OPEC  countries  located in the Middle East  supplied
approximately  a  quarter  of this  volume.  Given  the  dominance  of world oil
reserves located in this region,  this share is expected to grow in coming years
as oil fields in other parts of the world  gradually  reach maturity and begin a
process of natural decline.  The length of transportation  distances between the
Middle East and  consuming  areas means that such a trend would boost  ton-miles
(the product of volumes and transport  distances)  and could be  beneficial  for
tanker demand.

A significant  and ongoing shift toward  quality in vessels and  operations  has
taken place during the last decade as  charterers  and  regulators  increasingly
focus on safety and protection of the environment. Since 1990, there has been an
increasing   emphasis  on  environmental   protection  through  legislation  and
regulations such as the U.S. Oil Pollution Act of 1990,  International  Maritime
Organization protocols and classification  society procedures,  demanding higher
quality tanker construction,  maintenance, repair and operations. Operators that
have proven an ability to seamlessly integrate these required safety regulations
into their operations are being rewarded.  For example, the emergence of vessels
equipped with double hulls represented a  differentiation  in vessel quality and
enabled such vessels to command  improved  earnings in the spot charter markets.
The effect has been a shift in major charterers'  preference towards greater use
of double hulls and,  therefore,  more  difficult  trading  conditions for older
single-hull  vessels.  These  changes were  reflected  in the sharp  increase in
scrapping of older vessels during periods of weaker market  conditions in recent
years.  As a result,  the net  increase in  transportation  capacity for Suezmax
tankers has been  relatively  low during this period,  or 7.0% from 1993 through
2003  according  to R.S.  Platou  Economic  Research  a.s.  However,  due to the
increase  in oil  demand,  deliveries  have  increased  and net  Suezmax  tanker
capacity  has grown 13.5% since the  beginning  of 2003.  We believe  charterers
generally prefer more modern,  double-hull vessels resulting in a portion of the
older vessels achieving lower levels of employment. Two major oil companies have
announced they will no longer charter single-hull tonnage.

Environmental and Other Regulation

Government  regulation  significantly affects the ownership and operation of our
tankers.  They are subject to  international  conventions,  national,  state and
local laws and  regulations  in force in the  countries in which our vessels may
operate or are registered.

A variety of  governmental  and  private  entities  subject  our vessels to both
scheduled and  unscheduled  inspections.  These entities  include the local port
authorities  (U.S.  Coast Guard,  harbor master or  equivalent),  classification
societies,  flag state  administration  (country of  registry)  and  charterers,
particularly  terminal  operators and oil  companies.  Certain of these entities
require us to obtain permits, licenses and certificates for the operation of our
tankers.  Failure to maintain necessary permits or approvals could require us to
incur substantial  costs or temporarily  suspend operation of one or more of our
vessels.

We believe that the heightened level of environmental and quality concerns among
insurance  underwriters,   regulators  and  charterers  is  leading  to  greater
inspection  and  safety  requirements  on all  vessels  and may  accelerate  the
scrapping of older vessels  throughout  the industry.  Increasing  environmental
concerns  have  created  a demand  for  vessels  that  conform  to the  stricter
environmental standards. We are required to maintain operating standards for all
of our vessels that will  emphasize  operational  safety,  quality  maintenance,
continuous  training of our  officers  and crews and  compliance  with U.S.  and
international  regulations.  We believe that the  operation of our vessels is in
substantial  compliance  with  applicable  environmental  laws and  regulations;
however, because such laws and regulations are frequently changed and may impose
increasingly  stricter  requirements,  such  future  requirements  may limit our
ability to do business, increase our operating costs, force the early retirement
of our vessels,  and/or  affect their  resale  value,  all of which could have a
material adverse effect on our financial condition and results of operations.

Environmental Regulation--IMO

In 1992, the  International  Maritime  Organization,  or IMO (the United Nations
agency for maritime  safety and the  prevention  of marine  pollution by ships),
adopted regulations that set forth pollution prevention  requirements applicable
to tankers. These regulations, which have been adopted by more than 150 nations,
including many of the  jurisdictions in which our tankers operate,  provide,  in
part, that:

        o       tankers  between  25 and 30  years  old  must be of  double-hull
                construction   or  of  a  mid-deck   design  with  double  sided
                construction,  unless (1) they have wing tanks or  double-bottom
                spaces not used for the  carriage  of oil,  which cover at least
                30% of the  length  of the  cargo  tank  section  of the hull or
                bottom;  or (2) they are  capable  of  hydrostatically  balanced
                loading  (loading  less cargo into a tanker so that in the event
                of a breach of the hull, water flows into the tanker, displacing
                oil upwards instead of into the sea);

        o       tankers   30  years  old  or  older   must  be  of   double-hull
                construction or mid-deck design with double sided  construction;
                and

        o       all tankers are subject to enhanced inspections.

Also, under IMO regulations,  a tanker must be of double-hull  construction or a
mid-deck design with double sided  construction or be of another approved design
ensuring the same level of protection against oil pollution if the tanker:

        o       is the subject of a contract for a major  conversion or original
                construction on or after July 6, 1993;

        o       commences  a major  conversion  or has its keel laid on or after
                January 6, 1994; or

        o       completes a major conversion or is a newbuilding delivered on or
                after July 6, 1996.

Effective  September 2002, the IMO  accelerated  its existing  timetable for the
phase-out of single-hull oil tankers. These regulations require the phase-out of
most  single-hull  oil tankers by 2015 or earlier,  depending  on the age of the
tanker and whether it has  segregated  ballast  tanks.  After 2007,  the maximum
permissible  age for single-hull  tankers will be 26 years.  Compliance with the
new regulations regarding inspections of all tankers,  however,  could adversely
affect our operations.  Under current  regulations,  retrofitting  will enable a
tanker to operate until the earlier of 25 years of age and the anniversary  date
of its delivery in 2017.  However, as a result of the oil spill in November 2002
relating  to the loss of the M/T  Prestige,  which was  owned by a  company  not
affiliated  with us,  in  December  2003  the  Marine  Environmental  Protection
Committee  of  the  IMO  adopted  a  proposed  amendment  to  the  International
Convention  for the  Prevention of Pollution  from Ships to accelerate the phase
out of single-hull  tankers from 2015 to 2010 unless the relevant flag state, in
a particular case,  extends the date to 2015. This amendment came into effect in
April 2005.

The IMO has also negotiated international  conventions that impose liability for
oil pollution in international  waters and a signatory's  territorial waters. In
September 1997, the IMO adopted Annex VI to the International Convention for the
Prevention of Pollution from Ships to address air pollution from ships. Annex VI
was ratified in May 2004 and became  effective in May 2005. Annex VI sets limits
on sulfur oxide and nitrogen  oxide  emissions  from ship  exhausts and prohibit
deliberate emissions of ozone depleting substances, such as chlorofluorocarbons.
Annex VI also includes a global cap on the sulfur content of fuel oil and allows
for  special  areas to be  established  with more  stringent  controls on sulfur
emissions. We believe that compliance with the Annex VI regulations will have no
material  effect on our results of  operations.  Additional or new  conventions,
laws and regulations  may be adopted that could adversely  affect our ability to
manage our ships.

Under the International Safety Management Code, or ISM Code,  promulgated by the
IMO,  the party with  operational  control of a vessel is required to develop an
extensive  safety  management  system that  includes,  among other  things,  the
adoption  of  a  safety  and  environmental   protection  policy  setting  forth
instructions  and  procedures  for operating its vessels  safely and  describing
procedures  for  responding  to  emergencies.  We  will  rely  upon  the  safety
management system that we and our third party technical managers have developed.

The  ISM  Code  requires  that  vessel  operators  obtain  a  safety  management
certificate for each vessel they operate.  This certificate evidences compliance
by a vessel's  management with code requirements for a safety management system.
No vessel  can  obtain a  certificate  unless  its  manager  has been  awarded a
document of compliance,  issued by each flag state,  under the ISM Code. We have
the  requisite  documents of  compliance  for our offices and safety  management
certificates  for all of our tankers for which the  certificates are required by
the IMO. We are  required  to renew these  documents  of  compliance  and safety
management certificates annually.

Noncompliance  with the ISM Code and  other  IMO  regulations  may  subject  the
shipowner or bareboat charterer to increased liability, may lead to decreases in
available  insurance  coverage for affected vessels and may result in the denial
of access to, or detention in, some ports. For example, the U.S. Coast Guard and
European Union  authorities  have indicated that vessels not in compliance  with
the ISM Code will be prohibited from trading in U.S. and European Union ports.

Although the United States is not a party to these  conventions,  many countries
have  ratified and follow the  liability  plan adopted by the IMO and set out in
the  International  Convention on Civil  Liability  for Oil Pollution  Damage of
1969.  Under this  convention,  if the country in which the damage  results is a
party to the 1992 Protocol to the  International  Convention on Civil  Liability
for Oil Pollution  Damage,  a vessel's  registered  owner is strictly liable for
pollution  damage caused in the  territorial  waters of a  contracting  state by
discharge of persistent  oil,  subject to certain  complete  defenses.  Under an
amendment to the Protocol that became effective on November 1, 2003, for vessels
of 5,000 to 140,000  gross tons (a unit of  measurement  for the total  enclosed
spaces within a vessel), liability is limited to approximately $6.7 million plus
$942 for each additional gross ton over 5,000. For vessels of over 140,000 gross
tons,  liability is limited to  approximately  $134 million.  As the  convention
calculates liability in terms of a basket of currencies, these figures are based
on currency  exchange  rates on June 6, 2006.  The right to limit  liability  is
forfeited  under  the  International  Convention  on  Civil  Liability  for  Oil
Pollution Damage where the spill is caused by the owner's actual fault and under
the 1992  Protocol  where  the spill is caused  by the  owner's  intentional  or
reckless  conduct.   Vessels  trading  to  states  that  are  parties  to  these
conventions  must provide  evidence of insurance  covering the  liability of the
owner. In jurisdictions  where the  International  Convention on Civil Liability
for Oil Pollution Damage has not been adopted,  various  legislative  schemes or
common law govern, and liability is imposed either on the basis of fault or in a
manner similar to that convention.  We believe that our P&I insurance will cover
the liability under the plan adopted by the IMO.

U.S.  Oil  Pollution  Act of  1990  and  Comprehensive  Environmental  Response,
Compensation and Liability Act

The United States regulates the tanker industry with an extensive regulatory and
liability  regime  for  environmental  protection  and  cleanup  of oil  spills,
consisting  primarily of the U.S.  Oil  Pollution  Act of 1990,  or OPA, and the
Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA.
OPA affects all owners and operators  whose vessels trade with the United States
or its territories or possessions, or whose vessels operate in the waters of the
United States,  which include the U.S. territorial sea and the 200 nautical mile
exclusive  economic  zone  around  the  United  States.  CERCLA  applies  to the
discharge  of hazardous  substances  (other than oil) whether on land or at sea.
Both OPA and CERCLA impact our operations.

Under OPA,  vessel owners,  operators and bareboat  charterers are  "responsible
parties"  who are  jointly,  severally  and  strictly  liable  (unless the spill
results  solely from the act or omission of a third  party,  an act of God or an
act of war) for all  containment  and clean-up  costs and other damages  arising
from oil spills from their vessels.  These other damages are defined  broadly to
include:

        o       natural resource damages and related assessment costs;

        o       real and personal property damages;

        o       net  loss  of  taxes,  royalties,  rents,  profits  or  earnings
                capacity;

        o       net cost of public  services  necessitated  by a spill response,
                such as protection from fire, safety or health hazards; and

        o       loss of subsistence use of natural resources.

OPA limits the liability of responsible parties to the greater of $600 per gross
ton or $0.5  million  per tanker  that is over  3,000  gross  tons  (subject  to
possible  adjustment for inflation).  The act  specifically  permits  individual
states to impose  their  own  liability  regimes  with  regard to oil  pollution
incidents  occurring  within  their  boundaries,  and some states  have  enacted
legislation providing for unlimited liability for discharge of pollutants within
their waters.  In some cases,  states that have enacted this type of legislation
have  not  yet  issued   implementing   regulations   defining   tanker  owners'
responsibilities under these laws. CERCLA, which applies to owners and operators
of tankers,  contains a similar  liability  regime and  provides for cleanup and
removal of hazardous  substances  and for natural  resource  damages.  Liability
under CERCLA is limited to the greater of $300 per gross ton or $5 million.

These limits of liability do not apply, however, where the incident is caused by
violation  of  applicable  U.S.   federal  safety,   construction  or  operating
regulations,   or  by  the  responsible  party's  gross  negligence  or  willful
misconduct.  These limits do not apply if the responsible party fails or refuses
to report  the  incident  or to  cooperate  and  assist in  connection  with the
substance removal activities.  OPA and CERCLA each preserve the right to recover
damages under existing law, including maritime tort law.

OPA also requires owners and operators of vessels to establish and maintain with
the U.S. Coast Guard evidence of financial responsibility sufficient to meet the
limit of their  potential  strict  liability under the act. The U.S. Coast Guard
has enacted  regulations  requiring evidence of financial  responsibility in the
amount of $1,500  per gross ton for  tankers,  coupling  the OPA  limitation  on
liability  of $1,200 per gross ton with the CERCLA  liability  limit of $300 per
gross ton. Under these regulations, an owner or operator of more than one tanker
is required to obtain a  certificate  of  responsibility  for each vessel in the
fleet in an amount equal only to the financial responsibility requirement of the
tanker having the greatest  maximum strict  liability  under OPA and CERCLA.  We
have  provided  evidence of financial  responsibility  in the form of guarantees
issued by a guarantor approved by the U.S. Coast Guard and received certificates
of financial  responsibility  from the U.S.  Coast Guard for each of our vessels
that calls in U.S. waters.

We insure each of our vessels with pollution  liability insurance in the maximum
commercially  available  amount of $1.0  billion  per  incident  per  vessel.  A
catastrophic spill could exceed the insurance coverage available, in which event
there could be a material adverse effect on our business.

OPA also amended the Federal Water  Pollution  Control Act to require  owners or
operators of tankers operating in the waters of the United States to file vessel
response  plans with the U.S.  Coast  Guard,  and their  tankers are required to
operate in compliance with their U.S. Coast Guard approved plans. These response
plans must, among other things:

        o       address a "worst case" scenario and identify and ensure, through
                contract or other approved means,  the availability of necessary
                private   response   resources  to  respond  to  a  "worst  case
                discharge";

        o       describe crew training and drills; and

        o       identify a qualified individual with full authority to implement
                removal actions.

Vessel  response  plans for our  tankers  operating  in the waters of the United
States have been approved by the U.S. Coast Guard.  In addition,  the U.S. Coast
Guard has announced it intends to propose similar regulations  requiring certain
vessels to prepare  response plans for the release of hazardous  substances.  We
are responsible for ensuring our vessels comply with any additional regulations.

OPA does not prevent individual states from imposing their own liability regimes
with respect to oil pollution  incidents  occurring within their boundaries.  In
fact,  most  U.S.   states  that  border  a  navigable   waterway  have  enacted
environmental  pollution  laws that  impose  strict  liability  on a person  for
removal  costs and damages  resulting  from a discharge of oil or a release of a
hazardous substance. These laws may be more stringent than U.S. federal law.

European Union Tanker Restrictions

In July 2003, the European  Union adopted  regulations  that  accelerate the IMO
single hull tanker  phase-out  timetable.  Under the regulation no oil tanker is
allowed  to  operate  under  the flag of a EU  member  state,  nor shall any oil
tanker,  irrespective  of its flag,  be allowed to enter into ports or  offshore
terminals  under the  jurisdiction of a EU member state after the anniversary of
the date of delivery of the ship in the year  specified in the following  table,
unless such tanker is a double hull oil tanker:

--------------------------------------------------------------------------------
Category of Oil Tankers                         Date or Year
--------------------------------------------------------------------------------
Category 1 oil tankers of 20,000 dwt and
above carrying crude oil, fuel oil, heavy       2003 for ships delivered in
diesel oil or lubricating oil as cargo,         1980 or earlier
and of 30,000 dwt and above carrying            2004 for ships delivered in 1981
other oils, which do not comply with            2005 for ships delivered in
the requirements for protectively located       1982 or later
segregated ballast tanks
--------------------------------------------------------------------------------
Category 2 - oil tankers of 20,000 dwt
and above carrying crude oil, fuel oil,         2003 for ships delivered in
heavy diesel oil or lubricating oil as or       1975 or earlier
cargo, and of 30,000 dwt and above carrying     2004 for ships delivered in 1976
other oils, which do comply with the            2005 for ships delivered in 1977
protectivel located segregated ballast          2006 for ships delivered in 1978
tank requirements                               and 1979
                                                2007 for ships delivered in 1980
and                                             and 1981
                                                2008 for ships delivered in 1982
Category 3 - oil tankers of 5,000 dwt and       2009 for ships delivered in 1983
above but less than the tonnage specified       2010 for ships delivered in
for Category 1 and 2 tankers.                   1984 or later
--------------------------------------------------------------------------------

Furthermore,  under the  regulation,  all oil  tankers of 5,000 dwt or less must
comply with the double hull  requirements no later than the anniversary  date of
delivery of the ship in the year 2008. The  regulation,  however,  provides that
oil tankers operated  exclusively in ports and inland navigation may be exempted
from the double hull  requirement  provided that they are duly  certified  under
inland water  legislation.  The European  Union,  following  the lead of certain
European  Union nations such as Italy and Spain,  as of October  2003,  has also
banned all single-  hull tankers of 600 dwt and above  carrying  high grade oil,
regardless of flag, from entering or leaving its ports or offshore  terminals or
anchoring in areas under its jurisdiction.  Commencing in 2005,  certain single-
hull  tankers  above 15 years of age will also be  restricted  from  entering or
leaving European Union ports or offshore  terminals and anchoring in areas under
European Union jurisdiction.

The  European  Union has also  adopted  legislation  that:  (1) bans  manifestly
sub-standard vessels (defined as those over 15 years old that have been detained
by port  authorities at least twice in a six -month period) from European waters
and creates an obligation of port states to inspect  vessels  posing a high risk
to maritime  safety or the marine  environment;  and (2)  provides  the European
Union  with  greater  authority  and  control  over  classification   societies,
including  the ability to seek to suspend or revoke the  authority  of negligent
societies.   It  is  impossible  to  predict  what   legislation  or  additional
regulations,  if any,  may be  promulgated  by the  European  Union or any other
country or authority.

Vessel Security Regulations

Since the terrorist  attacks of September 11, 2001,  there has been a variety of
initiatives  intended to enhance  vessel  security.  On November 25,  2002,  the
Maritime  Transportation  Security  Act of 2002  (MTSA)  came  into  effect.  To
implement  certain  portions  of the MTSA,  in July 2003,  the U.S.  Coast Guard
issued regulations requiring the implementation of certain security requirements
aboard  vessels  operating in waters subject to the  jurisdiction  of the United
States.  Similarly, in December 2002, amendments to the International Convention
for the Safety of Life at Sea (SOLAS)  created a new  chapter of the  convention
dealing specifically with maritime security. The new chapter went into effect in
July 2004 and imposes various detailed security  obligations on vessels and port
authorities, most of which are contained in the newly created International Ship
and Port  Facilities  Security  (ISPS) Code. We are in compliance  with the ISPS
Code. Among the various requirements are:

        o       on-board  installation of automatic information systems, or AIS,
                to enhance vessel-to-vessel and vessel-to-shore communications;

        o       on-board installation of ship security alert systems;

        o       the development of vessel security plans; and

        o       compliance with flag state security certification requirements.

The U.S. Coast Guard regulations,  intended to align with international maritime
security standards,  exempt non-U.S.  tankers from MTSA vessel security measures
provided such vessels have on board, by July 1, 2004, a valid International Ship
Security  Certificate (ISSC) that attests to the vessel's  compliance with SOLAS
security  requirements  and the  ISPS  Code.  We have  implemented  the  various
security measures addressed by the MTSA, SOLAS and the ISPS Code ensure that our
tankers attain compliance with all applicable  security  requirements within the
prescribed time periods.  We do not believe these additional  requirements  will
have a material financial impact on our operations.

Inspection by Classification Societies

Every  seagoing  vessel  must be  "classed"  by a  classification  society.  The
classification  society certifies that the vessel is "in class," signifying that
the vessel has been built and  maintained  in  accordance  with the rules of the
classification society and complies with applicable rules and regulations of the
vessel's  country of registry and the  international  conventions  of which that
country is a member.  In addition,  where surveys are required by  international
conventions  and  corresponding  laws  and  ordinances  of  a  flag  state,  the
classification  society will undertake them on application or by official order,
acting on behalf of the authorities concerned.

The  classification  society also undertakes on request other surveys and checks
that are  required by  regulations  and  requirements  of the flag state.  These
surveys are subject to  agreements  made in each  individual  case and/or to the
regulations of the country concerned.

For  maintenance  of the  class,  regular  and  extraordinary  surveys  of hull,
machinery, including the electrical plant, and any special equipment classed are
required to be performed as follows:

Annual Surveys:  For seagoing  ships,  annual surveys are conducted for the hull
and the machinery,  including the  electrical  plant,  and where  applicable for
special  equipment  classed,  at  intervals  of  12  months  from  the  date  of
commencement of the class period indicated in the certificate.

Intermediate  Surveys:  Extended  annual surveys are referred to as intermediate
surveys and typically are conducted two and one-half  years after  commissioning
and each class renewal.  Intermediate surveys may be carried out on the occasion
of the second or third annual survey.

Class Renewal Surveys: Class renewal surveys, also known as special surveys, are
carried out for the ship's hull, machinery,  including the electrical plant, and
for any special equipment classed,  at the intervals  indicated by the character
of classification  for the hull. At the special survey, the vessel is thoroughly
examined,  including  audio-gauging  to  determine  the  thickness  of the steel
structures.  Should the  thickness be found to be less than class  requirements,
the  classification  society would prescribe steel renewals.  The classification
society may grant a one-year grace period for completion of the special  survey.
Substantial  amounts of money may have to be spent for steel  renewals to pass a
special survey if the vessel experiences excessive wear and tear. In lieu of the
special survey every four or five years, depending on whether a grace period was
granted, a shipowner has the option of arranging with the classification society
for the vessel's hull or machinery to be on a continuous  survey cycle, in which
every part of the vessel would be surveyed within a five-year cycle.

At an owner's  application,  the surveys required for class renewal may be split
according to an agreed schedule to extend over the entire period of class.  This
process is referred to as continuous class renewal.

All areas  subject  to survey  as  defined  by the  classification  society  are
required to be surveyed at least once per class period, unless shorter intervals
between  surveys are  prescribed  elsewhere.  The period  between two subsequent
surveys of each area must not exceed five years.

Most vessels are also  dry-docked  every 30 to 36 months for  inspection  of the
underwater  parts and for  repairs  related to  inspections.  If any defects are
found, the classification  surveyor will issue a "recommendation"  which must be
rectified by the ship owner within prescribed time limits.

Most insurance  underwriters  make it a condition for insurance  coverage that a
vessel be certified as "in class" by a classification  society which is a member
of the International  Association of Classification  Societies.  All our vessels
are  certified as being "in class" by Lloyd's  Register of Shipping (one vessel)
and Det norske Veritas (eight vessels).  All new and secondhand  vessels that we
purchase must be certified prior to their delivery under our standard contracts.

Risk of Loss and Liability Insurance

The operation of any cargo vessel  includes  risks such as  mechanical  failure,
collision,  property loss, cargo loss or damage and business interruption due to
political circumstances in foreign countries,  hostilities and labor strikes. In
addition, there is always an inherent possibility of marine disaster,  including
oil spills and other  environmental  mishaps,  and the liabilities  arising from
owning  and  operating  vessels  in  international  trade.  OPA,  which  imposes
virtually  unlimited  liability upon owners,  operators and demise charterers of
any vessel trading in the United States exclusive  economic zone for certain oil
pollution  accidents in the United  States,  has made  liability  insurance more
expensive  for ship owners and operators  trading in the United  States  market.
While we carry loss of hire insurance to cover 100% of our fleet,  we may not be
able to maintain this level of coverage.  Furthermore, while we believe that our
present insurance coverage is adequate,  not all risks can be insured, and there
can be no guarantee that any specific claim will be paid, or that we will always
be able to obtain adequate insurance coverage at reasonable rates.

Hull and Machinery Insurance

We have  obtained  marine  hull  and  machinery  and war risk  insurance,  which
includes the risk of actual or  constructive  total loss, for all of the vessels
in our  fleet.  The  vessels  in our fleet are each  covered up to at least fair
market value,  with  deductibles  of $350,000 per vessel per  incident.  We also
arranged  increased  value coverage for each vessel.  Under this increased value
coverage,  in the event of total loss of a vessel,  we will be able  recover for
amounts not  recoverable  under the hull and  machinery  policy by reason of any
under-insurance.

Protection and Indemnity Insurance

Protection  and  indemnity  insurance  is  provided  by  mutual  protection  and
indemnity  associations,  or P&I  Associations,  which  covers  our third  party
liabilities  in connection  with our shipping  activities.  This includes  third
party  liability  and  other  related  expenses  of  injury  or  death  of crew,
passengers and other third parties, loss or damage to cargo, claims arising from
collisions with other vessels,  damage to other third party property,  pollution
arising  from oil or other  substances,  and salvage,  towing and other  related
costs, including wreck removal.  Protection and indemnity insurance is a form of
mutual  indemnity  insurance,   extended  by  protection  and  indemnity  mutual
associations, or "clubs." Our coverage, except for pollution, is unlimited.

Our current  protection  and  indemnity  insurance  coverage for pollution is $1
billion per vessel per incident. The fourteen P&I Associations that comprise the
International  Group insure  approximately 90% of the world's commercial tonnage
and have  entered  into a  pooling  agreement  to  reinsure  each  association's
liabilities.  Each P&I  Association  has capped  its  exposure  to this  pooling
agreement at $4.25 billion. As a member of a P&I Association,  which is a member
of the International  Group, we are subject to calls payable to the associations
based on its claim  records as well as the claim records of all other members of
the  individual  associations,  and  members  of the  pool  of P&I  Associations
comprising the International Group.

Competition

We operate in markets that are highly  competitive and based primarily on supply
and demand.  We compete for  charters  on the basis of price,  vessel  location,
size,  age and  condition  of the  vessel,  as well as on our  reputation  as an
operator.  We arrange our time  charters and voyage  charters in the spot market
through the use of brokers,  who  negotiate  the terms of the charters  based on
market  conditions.  We compete  primarily with owners of tankers in the Suezmax
and class size.  Ownership of tankers is highly  fragmented and is divided among
major oil companies and independent vessel owners.

Permits and Authorizations

We are  required  by various  governmental  and  quasi-governmental  agencies to
obtain certain permits,  licenses and certificates  with respect to our vessels.
The kinds of permits,  licenses and  certificates  required  depend upon several
factors,  including  the commodity  transported,  the waters in which the vessel
operates,  the nationality of the vessel's crew and the age of a vessel. We have
been able to obtain all permits, licenses and certificates currently required to
permit our vessels to operate. Additional laws and regulations, environmental or
otherwise,  may be adopted  which  could  limit our  ability to do  business  or
increase the cost of us doing business.

     C.     ORGANIZATIONAL STRUCTURE

Prior to September 30, 1997, the Company was a wholly owned subsidiary of Ugland
Nordic  Shipping  ASA, or UNS, a Norwegian  shipping  company  whose shares were
listed on the Oslo Stock Exchange.  On September 30, 1997,  11,731,613  warrants
for the  purchase of the  Company's  common  shares,  which had been sold to the
public in 1995,  were  exercised.  Until May 30, 2003, UNS acted as the Manager,
and provided  managerial,  administrative  and advisory  services to the Company
pursuant to the  Management  Agreement.  Since May 30,  2003,  Scandic  American
Shipping  Ltd. has acted as the  Company's  Manager,  and provides such services
pursuant to the Management  Agreement.  The Management  Agreement was amended on
October  12, 2004 to further  align the  Manager's  interests  with those of the
Company as a shareholder of the Company.  See Item 4--Information on the Company
-- Business Overview --The Management Agreement.

     D.     PROPERTY, PLANT AND EQUIPMENT

See Items 4 - Information on the Company - Business  Overview - Our Fleet, for a
description  of our  vessels.  The vessels are  mortgaged  for  securing the new
credit facility.

ITEM 4A.    UNRESOLVED STAFF COMMENTS

            Not applicable.

ITEM 5.     OPERATING AND FINANCIAL REVIEW AND PROSPECTS

     A.     OPERATING RESULTS

We present our income statement using voyage revenues and voyage  expenses.  The
Company's  vessels are  operated  under  bareboat  charters,  spot  related time
charters  and  spot  charters.  Under a  bareboat  charter  the  charterer  pays
substantially all of the vessel voyage and operating costs. Under a spot related
time charter,  the charterer pays  substantially all of the vessel voyage costs.
Under a spot charter,  the vessel owner pays all such costs. Vessel voyage costs
consist primarily of fuel, port charges and commissions.

Since the amount of voyage  expenses that we incur for a charter  depends on the
type of the charter,  we use net voyage revenues to provide  comparability among
the  different  types of  charters.  Net voyage  revenue,  a non-GAAP  financial
measure,  provides more  meaningful  disclosure than voyage  revenues,  the most
directly  comparable  financial  measure under accounting  principles  generally
accepted  in the United  States . Net voyage  revenues  divided by the number of
days on the  charter  provides  the Time  Charter  Equivalent  (TCE)  Rate.  For
bareboat charters operating costs must be added in order to calculate TCE rates.
Net voyage  revenues and TCE rates are widely used by investors  and analysts in
the  tanker  shipping  industry  for  comparing  the  financial  performance  of
companies and for preparing  industry  averages.  The following table reconciles
our net voyage revenues to voyage revenues. In 2004, our calculation methodology
for net voyage  revenues was adjusted to better  reflect the various  commission
schemes  under which we operate.  Prior period TCE amounts have been adjusted to
conform to the 2004 reconciliation.

                           Year Ended          Year Ended         Year Ended
                        December 31, 2005   December 31, 2004  December 31, 2003
-------------------------------------------------------------------------------
Voyage Revenue            117,110,178         67,451,598           37,370,756
Voyage Expenses           (30,980,916)        (4,925,353)            (184,781)
-------------------------------------------------------------------------------
Net Voyage Revenue         86,129,262         62,526,245           37,185,975
-------------------------------------------------------------------------------

YEAR ENDED DECEMBER 31, 2005 COMPARED TO YEAR ENDED DECEMBER 31, 2004

Voyage revenues  increased by 73.6% to $117,110,178 in 2005 from  $67,451,598 in
2004.  Net  voyage  revenues  increased  by 37.7% to  $86,129,262  in 2005  from
$62,526,245 in 2004.  Voyage  expenses  increased by 529% to $30,980,916 in 2005
from $4,925,353 in 2004. The increase in voyage revenues and net voyage revenues
is primarily due to the growth of the Company.  The Company  increased its fleet
from 4 vessels as at December 31, 2004 or 1,133 ship days, meaning the number of
days the Company's vessels were generating revenue,  during 2004 to 8 vessels as
at December 31, 2005 or 2,193 ship days during 2005. This represents an increase
in cargo capacity of 93.5%.

Vessel  operating  expenses were $11,220,770 for 2005 compared to $1,976,766 for
2004.  The  increase  is due to the change in the  Company's  current  operating
structure  as of October 2004 from a passive  leasing  company into an operating
company.  Prior to October  2004 the  original  three  vessels  were on bareboat
charter to BP Shipping.  Under bareboat charter  agreements all vessel operating
expenses are paid by the charterer.

Administrative  expenses were  $8,492,164 for 2005 compared to  $10,851,688  for
2004. The decrease was due to the non-cash charge of $9,252,365 in 2004 compared
to $3,582,995 in 2005 that is linked to a change in the compensation  scheme for
our  Manager.  This  decrease  was  off-set  by  a  full  year  of  general  and
administrative expenses reflecting the new operating structure of the Company as
described above. The original incentive plan for the Manager was a revenue based
cash commission structure.  The Manager agreed to eliminate the commission.  The
cash commission was replaced by restricted  share issuances to the Manager of 2%
of the Company's  outstanding  common shares from time to time in order to align
the  interests  of the  Manager and the  Company.  These  restricted  shares are
non-transferable  for  three  years  from  issuance.   In  connection  with  the
transition to an operating  company,  the Company  introduced a stock  incentive
plan with 400,000  shares  reserved for issuance of which  320,000 stock options
were granted at December 31, 2005. The initial strike price for options  granted
in 2005 was  equal to  $38.75,  which  was the  offering  price per share of our
common  shares in our  follow-on  offering  in  November  2004.  The Company has
recorded a compensation  cost of $1,415,000  associated  with the employee stock
option  awards.  For  further  information,  see  Item  6 --  Directors,  Senior
Management and Employees -- 2004 Stock Incentive Plan.

Net operating income for 2005 increased 14.3% from the comparable period in 2004
from  $42,779,627  to  $48,887,328  primarily  due to increased  revenue  offset
partially by increased costs as described above.

Depreciation,  which  includes  depreciation  of  vessels  and  amortization  of
drydockings,  increased from  $6,918,164  for 2004 to $17,529,000  for 2005. The
increase  is due to the  increase  in book value of our fleet as a result of our
acquisitions  of four vessels  during 2005 compared to acquisition of one vessel
during 2004.

Interest expense  increased from $1,971,304 for 2004 to $3,453,963 for 2005. The
increase is primarily due to the decision of the Board to keep non-retiring debt
on the balance sheet in the region of $15 million per vessel which we believe is
an appropriate debt to equity ratio for the Company.

YEAR ENDED DECEMBER 31, 2004 COMPARED TO YEAR ENDED DECEMBER 31, 2003

Voyage revenues  increased by 80.5% to $67,451,598 in 2004, from  $37,370,756 in
2003.  Net voyage  revenues  increased  by 68.1% to  $62,526,245  in 2004,  from
$37,185,975 in 2003. The increase in voyage revenues and net voyage revenues was
due to higher  tanker spot market  rates in the twelve  month period in 2004 and
the addition of one vessel on November  23,  2004.  The tanker spot market rates
are determined by the demand for the carriage of oil and the distance the oil is
to be carried,  measured in tonne miles,  and the supply of vessels to transport
that oil. As a result of the strong spot market rates during 2004, our TCE rates
increased 46.6% to $62,231 for 2004, from $42,460 for 2003.

Vessel  operating  expenses were  $1,976,766  for 2004.  There are no comparable
figures for 2003.  The Company did not have vessel  operating  expenses  for the
comparable  period of 2003 since all the vessels  were  chartered to BP Shipping
under bareboat charter agreements. Under bareboat charter agreements all vessels
operating expenses are paid by the charterer.

Administrative  expenses  increased  by  2,218%  to  $10,851,688  in 2004,  from
$468,087  in 2003.  The  increase is  primarily  due to  share-based  expense of
$9,252,365,  which  results  from a change in the  compensation  scheme  for our
Manager,  Scandic American Shipping Ltd. The Management Agreement was amended in
2004 from a cash commission  structure based on charter revenue to a share-based
structure that provides 2% of the Company's  outstanding  shares to the Manager.
Other  administrative  costs have  increased as a result of the transition to an
operating  company.  In 2004,  the  Company  engaged  the  Manager to assume the
commercial  and  operational  responsibility  of our  vessels  and to manage our
day-to-day  business.  This agreement is based on cost incurred plus a fixed fee
of $100,000 per annum. Until June 30, 2004, the Company paid an annual fixed fee
of  $250,000  for  these  services.  Furthermore,  the  Company  hired our Chief
Executive Officer, Herbjorn Hansson, in 2004.

Net operating income for 2004 increased 43.1% from the comparable period in 2003
from  $29,886,849 to $42,779,627  primarily due to increased  revenue  partially
offset by increased costs as described above.

     B.     LIQUIDITY AND CAPITAL RESOURCES

YEAR ENDED DECEMBER 31, 2005 COMPARED TO YEAR ENDED DECEMBER 31, 2004

Cash  flows  provided  by  operating  activities  decreased  by 18.7% in 2005 to
$51,055,588 compared to $62,817,261 in 2004 primarily derived from the growth of
the Company as described above.

Cash flow provided from financing  activities was $226,613,441 for 2005 compared
to $33,486,608 for the same period in 2004. The increase was due to (i) increase
in proceeds from 2004 to 2005 of $49.8 million from a follow-on  offering,  (ii)
increase  from 2004 to 2005 in net  proceeds  from the  drawdown  of the  credit
facility of $160.0 million,  offset by (iii) increased  dividends paid from 2004
to 2005 of $17.1  million and (iv) decrease from 2004 to 2005 in payment of loan
facility  costs of $0.4  million  in  respect  of our $300  million  New  Credit
Facility.

Cash  flow  used  in  investing  activities  increased  by  344.7%  in  2005  to
$294,161,063  compared to  $66,137,277  in 2004.  The  increase  represents  the
acquisition costs of the four vessels acquired during 2005.

In February  2006,  the Company  agreed to acquire a double hull Suezmax  tanker
from an unrelated third party for a purchase price of $69.0 million.  The vessel
was delivered to us on April 10, 2006.

In March 2006, the Company sold 4,297,500 shares (including the  over-allotment)
in a public  offering in the U.S. to repay  outstanding  debt.  The offering was
priced at $28.50 per share, and net proceeds to the Company were $115.2 million.

In April 2006, the Company  borrowed $69.0 million under the New Credit Facility
to finance the ninth vessel delivered to the Company on April 10, 2006

The Company believes that its borrowing  capacity under the New Credit Facility,
together with its working capital, are sufficient to fund its ongoing operations
and commitment for capital expenditures.


YEAR ENDED DECEMBER 31, 2004 COMPARED TO YEAR ENDED DECEMBER 31, 2003

Cash flows provided by operating  activities  increased to $62,817,261  for 2004
from  $29,893,551  for 2003. The majority of the increases  resulted from higher
cash flows related to net voyage  revenues.  The cash flows from  customers less
payments for voyage expenses were  $67,415,268 and $32,320,191 in 2004 and 2003,
respectively. The increase in cash flows were offset by an increase in cash paid
for vessel operations of $1,925,508 in 2004.

Cash flows provided by financing activities for 2004 was $33,486,608 compared to
cash flows provided by financing  activities of $29,605,410  for the same period
in 2003.  The  increase  was due to (i)  proceeds  from a follow-on  offering of
$112.1  million  offset by (ii)  increased  dividends  paid from 2003 to 2004 of
$17.6 million,  (iii)  repayment of $30 million in bank debt and (iv) payment of
loan  facility  costs of $1.5  million  in respect  of our $300  million  credit
facility.

Cash flow used by investing  activities  was  $66,137,277  which  represents the
acquisition  cost  of the  vessel  acquired  in  November  2004.  There  were no
investing activities for the comparable period of 2003.

In March 2005, the Company sold 3,500,000  shares in a public offering in the US
to fund  the  $149.2  million  acquisition  costs  of two  vessels  and to repay
outstanding  debt under our credit  facility.  The offering was priced at $49.50
per share,  and net proceeds  (after  offering  costs of $ 11.1  million) to the
Company were $162.1 million.

In June 2005,  the Company  agreed to acquire a double hull suezmax tanker built
in 1998 for $71.4  million.  The vessel is  expected  to be  delivered  from the
seller to the Company no later than end August  2005.  The Company has an unused
credit facility of $300 million at June 30, 2005.

The Company  believes that its  borrowing  capacity  under the credit  facility,
together with its working  capital is sufficient to fund its ongoing  operations
and commitment for capital expenditures.

     C.     RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

            Not applicable

     D.     TREND INFORMATION

The oil tanker  industry has been highly  cyclical,  experiencing  volatility in
charterhire  rates and vessel values resulting from changes in the supply of and
demand for crude oil and tanker capacity. See Item 4. Information on the Company
- Business Overview - The Tanker Market 2005.

     E.     OFF BALANCE SHEET ARRANGEMENTS

            Not applicable

     F.     DISCLOSURE OF CONTRACTUAL OBLIGATIONS

As of December 31, 2005  significant  contractual  obligations  consisted of our
obligations as borrower under our New Credit Facility and our obligations  under
the Management Agreement with Scandic American Shipping Ltd.

The  following  table  sets  out  long-term   financial  and  other   commercial
obligations outstanding as of December 31, 2005 (all figures in USD `000)

Payment Due by Period:
-------------------------------------------------------------------------------
                                                    2007       2010       2013
Contractual Obligations       Total      2006      -2009      -2012      -2019
-------------------------------------------------------------------------------
Credit Facility (1)          130,000        0    130,000          0          0
Interest Payments (2)         24,383    6,578     17,805          0          0
Committment Fees (3)           1,342      362        980          0          0
Management Fees (4)            1,400      100        300        300        700
-------------------------------------------------------------------------------
Total                        157,125    7,040    149,085        300        700
-------------------------------------------------------------------------------

Notes:
     (1) Refers to our obligation to repay indebtedness outstanding as of
         December 31, 2005
     (2) Refers to estimated interest payments over the term of the indebtedness
         outstanding as of December 31, 2005 assuming a weighted
         average interest rate of  4.99% per annum.
     (3) Refers to estimated committment fees over the term of the indebtedness
         outstanding as of December 31, 2005
     (4) Refers to the management fees payable to Scandic American Shipping Ltd.
         under the Management Agreement with the Manager.

CRITICAL ACCOUNTING POLICIES

We prepare our financial  statements in accordance  with  accounting  principles
generally  accepted in the United  States of America (US GAAP).  Following  is a
discussion of the accounting policies that involve a high degree of judgment and
the methods of their  application.  For a further  description  of our  material
accounting  policies,  please  read Item 18 -  Financial  Statements--  Note 1 -
Summary of Significant Accounting Policies.

Revenue recognition

We generate a majority of our revenues from vessels  operating in pools and from
spot charters. Within the shipping industry, the two methods used to account for
voyage  revenues and expenses are the percentage of completion and the completed
voyage methods.  Most shipping  companies,  including our pool managers and spot
charter managers are using the percentage of completion  method. In applying the
percentage   of   completion   method,   we  believe  that  in  most  cases  the
discharge-to-discharge  basis of calculating  voyages more  accurately  reflects
voyage results than the load-to-load  basis. At the time of cargo discharge,  we
generally have information about the next load port and expected discharge port,
whereas at the time of loading we are  normally  less certain what the next load
port will be.

Long-lived assets

A significant  part of the Company's total assets  consists of our vessels.  The
oil tanker  market is highly  cyclical  and the useful  lives of our vessels are
dependent  on a number of  factors,  such as future  market  demand  for oil and
future market supply of tanker capacity.

Depreciable lives

Management uses considerable judgment when establishing the depreciable lives of
our vessels.  In order to estimate useful lives of our vessels,  Management must
make assumptions  about future market  conditions in the oil tanker market.  The
Company  considers  the  establishment  of  depreciable  lives to be a  critical
accounting estimate.

Drydocking

Generally,  we  drydock  each  vessel  every  two and a half to five  years.  We
capitalize a  substantial  portion of the costs we incur during  drydocking  and
amortize  those  costs  on  a  straight-line  basis  from  the  completion  of a
drydocking to the estimated completion of the next drydocking.  We expense costs
related to routine  repairs and maintenance  incurred during  drydocking that do
not improve or extend the useful lives of the assets.

Impairment

Our vessels are  evaluated  for  impairment  whenever  indicators  of impairment
exist.  When an  impairment  indicator  is present,  the Company  must  evaluate
whether the carrying  amounts of the vessels are  recoverable.  If an impairment
test is warranted,  we assess whether the undiscounted cash flows expected to be
generated  by our  long-lived  assets  exceed  their  carrying  value.  If  this
assessment  indicates  that the long-lived  assets are impaired,  the assets are
written down to their fair value.  These  assessments are based on our judgment,
which includes the estimate of future cash flows from long-lived assets.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the Financial Accounting Standards Board, or FASB, issued SFAS
No. 153,  Exchanges of Non-monetary  Assets, an amendment of APB Opinion No. 29.
The adoption of this statement,  effective June 2005, did not have any impact on
the Company's results of operations, financial position or cash flows.

In May 2005,  the FASB issued  Statement  SFAS No. 154,  Accounting  Changes and
Error  Corrections,  effective for accounting  changes and corrections of errors
made in fiscal  years  beginning  after  December  15,  2005.  SFAS 154 requires
voluntary  changes  in  accounting  principle  be  retrospectively   applied  to
financial   statements  from  previous   periods  unless  such   application  is
impracticable.   Under  the  newly  issued  standard  changes  in  depreciation,
amortization,  or  depletion  for  long-lived,  non-financial  assets  should be
accounted for as a change in accounting estimate that is affected by a change in
accounting  principle.  The Company  believes that the adoption of this standard
will  not  have a  material  impact  on the  Company's  results  of  operations,
financial position or cash flow.

ITEM 6.     DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

     A.     DIRECTORS AND SENIOR MANAGEMENT

Directors and Senior Management of the Company and the Manager

Pursuant to the Management Agreement with Scandic American Shipping Ltd., or the
Manager, the Manager provides  management,  administrative and advisory services
to us. The Manager is owned by Herbjorn Hansson,  our Chairman,  and Andreas Ove
Ugland, one of our directors,  and may engage in business  activities other than
with respect to the Company.

Set forth below are the names and  positions of the directors of the Company and
executive officers of the Company and the Manager.  The directors of the Company
are elected  annually,  and each director elected holds office until a successor
is elected.  Officers of both the Company and the Manager are elected  from time
to time by vote of the  respective  board of  directors  and hold office until a
successor is elected.

                                  The Company

Name                    Age     Position
-------------------------------------------------------------------------------
Herbjorn Hansson        58      Chairman, Chief Executive Officer, President and
                                Director
Turid M. Sorensen       46      Chief Financial Officer
Rolf Amundsen           61      Chief Investor Relations Officer
Hon. Sir David Gibbons  78      Director
George C. Lodge         78      Director
Andreas Ove Ugland      51      Director
Torbjorn Gladso         59      Director
Andrew W. March         50      Director
Paul J. Hopkins         58      Director

                                   The Manager

Name                    Age    Position
-------------------------------------------------------------------------------

Herbjorn Hansson        58      Director, President and Chief Executive Officer
Turid M. Sorensen       46      Chief Financial Officer
Rolf Amundsen           61      Chief Investor Relations Officer
Frithjof Bettum         44      Vice President Technical Operations & Chartering
Jan Erik Langangen      56      Executive Vice President--Business Development
                                and Legal

Certain  biographical  information  with respect to each  director and executive
officer of the Company and the Manager listed above is set forth below.

Herbjorn  Hansson  earned his M.B.A.  at the  Norwegian  School of Economics and
Business  Administration and Harvard Business School. In 1974 he was employed by
the Norwegian Shipowners'  Association.  In the period from 1975 to 1980, he was
Chief  Economist and Research  Manager of  INTERTANKO,  an industry  association
whose members control about 70% of the world's independently owned tanker fleet,
excluding  state owned and oil company  fleets.  During the 1980s,  he was Chief
Financial  Officer  of  Kosmos/Andres  Jahre,  at the  time  one of the  largest
Norwegian  based shipping and industry  groups.  In 1989,  Mr.  Hansson  founded
Ugland  Nordic  Shipping  AS, or UNS,  which  became one of the world's  largest
owners of specialized  shuttle tankers. He served as Chairman in the first phase
and as  Chief  Executive  Officer  as from  1993 to 2001  when  UNS,  under  his
management,  was  sold  to  Teekay  Shipping  Corporation,  or  Teekay,  for  an
enterprise  value of $780.0  million.  He continued  to work with  Teekay,  most
recently  as Vice  Chairman  of  Teekay  Norway  AS,  until he  started  working
full-time for the Company on September 1, 2004.  Mr.  Hansson is the founder and
has  been  Chairman  and  Chief  Executive  Officer  of the  Company  since  its
establishment  in 1995.  He also is a member  of  various  governing  bodies  of
companies    within     shipping,     insurance,     banking,     manufacturing,
national/international  shipping agencies including classification societies and
protection  and indemnity  associations.  Mr. Hansson is fluent in Norwegian and
English, and has a command of German and French for conversational purposes.

Turid  M.  Sorensen  was  appointed  Chief  Financial  Officer  by the  Board of
Directors  on  February  6,  2006.  She  has  a  bachelor   degree  in  Business
Administration  from the Norwegian  School of  Management.  Ms.  Sorensen has 20
years of  experience  in the shipping  industry.  During the period from 1984 to
1987,  she worked for Anders  Jahre AS and Kosmos AS in Norway and held  various
positions within accounting and information technology.  In the period from 1987
to 1995, Ms.  Sorensen was Manager of Accounting and IT for Skaugen  PertroTrans
Inc., in Houston,  Texas.  After  returning to Norway she was employed by Ugland
Nordic  Shipping ASA and Teekay Norway AS as Vice  President,  Accounting.  From
October 2004 until her appointment as Chief Financial Officer, she served as our
Treasurer and Controller.

Rolf Amundsen was appointed Chief Investor  Relations Officer and Advisor to the
Chairman  by the Board of  Directors  on February 6, 2006 and prior to that time
served as our Chief  Financial  Officer  from June 2004.  Mr.  Admundsen  has an
M.B.A. in economics and business administration,  and his entire career has been
in international banking.  Previously,  Mr. Amundsen has served as the president
of the financial  analysts  society in Norway.  Mr. Amundsen served as the chief
executive  officer  of a  Nordic  investment  bank  for  many  years,  where  he
established a large  operation for the  syndication  of  international  shipping
investments.

Andreas Ove Ugland has been a director of the Company since  February  1997. Mr.
Ugland has also served as director and Chairman of Ugland International  Holding
plc, a shipping/transport  company listed on the London Stock Exchange,  Andreas
Ugland & Sons AS, Grimstad,  Norway,  H0egh Ugland  Autoliners AS, Oslo and Buld
Associates Inc., Bermuda. Mr. Ugland has had his whole career in shipping in the
Ugland family owned shipping group. Mr. Ugland is a shareholder and the Chairman
of the Manager.

Andrew W. March has been a director of the Company  since June 2005.  Mr.  March
also currently serves in a management position with Vitol S.A., an international
oil trader,  involved in supply,  logistics  and transport and as a director for
Imarex,  an electronic  trading platform for freight  derivatives.  From 1978 to
2004, Mr. March served in various  positions with  subsidiaries of BP p.l.c., an
international oil major company.  Most recently,  from January 2001 to 2004, Mr.
March was Commercial  Director of BP Shipping Ltd.,  responsible for all aspects
of the business  including long term strategy.  From 1986 to 2000, Mr. March was
employed in various positions with BP Trading, serving as Global Product Trading
Manager from 1999. Mr. March received his MBA from Liverpool University.

Sir David Gibbons has been a director of the Company since  September  1995. Sir
David  served as the Premier of Bermuda  from August 1977 to January  1982.  Sir
David has served as  Chairman  of The Bank of N.T.  Butterfield  and Son Limited
from 1986 to 1997,  Chairman of Colonial  Insurance  Co. Ltd.  since 1986 and as
Chief Executive  Officer of Edmund Gibbons Ltd. since 1954. Sir David Gibbons is
a member of our Audit Committee.

George  C.  Lodge has been a  director  of the  Company  since  September  1995.
Professor  Lodge has been a member of the Harvard  Business School faculty since
1963. He was named associate professor of business  administration at Harvard in
1968 and received tenure in 1972.

Paul J. Hopkins has been a director of the Company since June 2005.  Mr. Hopkins
is also a Vice President and a director of Corridor  Resources  Inc., a Canadian
publicly traded  exploration and production  company.  From 1989 through 1993 he
served with Lasmo as Project Manager during the start-up of the  Cohasset/Panuke
oilfield  offshore  Nova Scotia,  the first  offshore oil  production in Canada.
Earlier,  Mr.  Hopkins  served  as a  consultant  on  frontier  engineering  and
petroleum  economic  evaluations in the international oil industry.  Mr. Hopkins
was seconded to Chevron UK in 1978 to assist with the gas export  system for the
Ninian Field.  From 1973,  he was employed  with Ranger Oil (UK) Limited,  being
involved in the drilling and  production  testing of oil wells in the North Sea.
Through  the end of 1972 he worked  with  Shell  Canada as part of its  offshore
Exploration Group.

Torbjorn  Gladso has been a director  of the Company  since  October  2003.  Mr.
Gladso is a partner in Saga  Corporate  Finance AS. He has extensive  experience
within  investment  banking since 1978. He has been the Chairman of the Board of
the Norwegian Register of Securities and Vice Chairman of the Board of Directors
of the Oslo Stock Exchange. Mr. Gladso is Chairman of our Audit Committee.

Jan Erik Langangen is the Executive Vice  President,  Business  Development  and
Legal, of the Manager.  Mr. Langangen  previously  served as the Chief Financial
Officer  from 1979 to 1983,  and as Chairman of the Board from 1987 to 1992,  of
Statoil,  an oil and gas company that is controlled by the Norwegian  government
and that is the largest  company in Norway.  He also  served as Chief  Executive
Officer of UNI Storebrand from 1985 to 1992. Mr.  Langangen was also Chairman of
the Board of the Norwegian  Governmental Value Commission from 1998 to 2001. Mr.
Langangen  is a  partner  of  Langangen  &  Helset,  a  Norwegian  law  firm and
previously was a partner of the law firm Langangen & Engesaeth from 1996 to 2000
and of the law firm  Thune & Co.  from 1994 to 1996.  Mr.  Langangen  received a
Masters of Economics from The Norwegian  School of Business  Administration  and
his law degree from the University of Oslo.

Frithjof Bettum was appointed Vice President--Technical  Operations & Chartering
of the  Manager  on October 1, 2005.  Mr.  Bettum has a  Mechanical  Engineering
degree from Vestfold University  College.  Mr. Bettum has 21 years of experience
in the shipping and the offshore  business.  From 1984 to 1992,  Mr.  Bettum was
employed  by Allum  Engineering  AS in  Sandefjord,  Norway  where he  served as
project  manager.  At Allum  Engineering AS Mr. Bettum worked on projects in the
areas of  engineering,  the new building and  conversion  management  of shuttle
tankers,  Floating Production,  Storage and Offloading (FPSO),  semi-submersible
drilling units and the shore based manufacturer industry. From 1993 to 2001, Mr.
Bettum was employed by Nordic  American  Shipping AS (which later became  Ugland
Nordic Shipping ASA) where he served as Vice  President--Offshore.  In 2004, Mr.
Bettum  joined  Teekay  Norway  AS as  Vice  President  Offshore  where  he  was
responsible for business  development,  the daily  operations of the company and
the conversion of shuttle tankers and offshore units.

     B.     COMPENSATION

Compensation of Directors and Officers

During  2005,  the  six  non-employee  directors  received,  in  the  aggregate,
approximately  $228,100 in cash fees for their services as directors.  From June
20, 2005 the Board was  expanded  from five to seven  directors of which each of
the non-employee  directors receives a fee at the annual rate of $45,000.  We do
not pay director  fees to employee  directors.  We do,  however,  reimburse  our
directors  for all  reasonable  expenses  incurred  by them in  connection  with
serving on our board of directors.  Directors may receive  restricted  shares or
other grants under our 2004 Stock Incentive Plan described below.

We have an employment agreement with Herbjorn Hansson,  our Chairman,  President
and Chief Executive Officer, Turid M. Sorensen, our Chief Financial Officer, and
Rolf Amundsen, our Chief Investor Relations Officer and Advisor to the Chairman.
Mr.  Hansson  does not  receive  any  additional  compensation  for serving as a
director  or the  Chairman  of the  Board.  The  aggregate  compensation  of our
executive officers during 2005 was $475,000.  The aggregate  compensation of our
executive  officers is expected to be  approximately  $720,000  during 2006.  On
certain terms the employment  agreement with Mr. Hansson may be terminated by us
or Mr.  Hansson  upon  six  months'  written  notice  to the  other  party.  The
employment  agreement  with  Ms.  Sorensen  may  be  terminated  by us or by Ms.
Sorensen  upon six months'  written  notice to the other party.  The  employment
agreement with Mr.  Amundsen may be terminated by us or Mr.  Amundsen upon three
months' written notice to the other party.

2004 Stock Incentive Plan

Under the terms of the  Company's  2004 Stock  Incentive  Plan,  the  directors,
officers  and certain key  employees of the Company and the Manager are eligible
to receive awards which include  incentive  stock options,  non-qualified  stock
options,  stock appreciation  rights,  dividend  equivalent  rights,  restricted
stock,  restricted stock units and performance shares. A total of 400,000 common
shares are reserved for issuance upon exercise of options,  as restricted  share
grants or otherwise under the plan. Included under the 2004 Stock Incentive Plan
are options to purchase common shares at an exercise price equal to $38.75,  the
offering  price  per  share of the  Company's  common  shares  in our  follow-on
offering in November 2004, subject to annual downward  adjustment if the payment
of dividends in the related  fiscal year exceed a 3% yield  calculated  based on
the initial strike price.  During 2005 the Company  granted,  under the terms of
the Company's 2004 Stock  Incentive  Plan, an aggregate of 320,000 stock options
that the Board of Directors had agreed to issue during 2004.  These options will
vest in equal  installments on each of the first four anniversaries of the grant
dates.

     C.     BOARD PRACTICES

The  members of the  Company's  board of  directors  serve until the next annual
general meeting  following his or her election to the board.  The members of the
current board of directors  were elected at the annual  general  meeting held in
2005.  The Company's  Board of Directors  has  established  an Audit  Committee,
consisting of two independent directors,  Messrs. Gladso and Gibbons. Mr. Gladso
serves  as the  audit  committee  financial  expert.  The  members  of the Audit
Committee  do not  receive  additional  remuneration  for  serving  on the Audit
Committee in this  capacity.  The Audit  Committee  provides  assistance  to the
Company's board of directors in fulfilling their responsibility to shareholders,
and investment community relating to corporate  accounting,  reporting practices
of the Company,  and the quality and integrity of the  financial  reports of the
Company.  The Audit Committee,  among other duties,  recommends to the Company's
board of  directors  the  independent  auditors  to be  selected  to  audit  the
financial  statements of the Company;  meets with the  independent  auditors and
financial  management  of the Company to review the scope of the proposed  audit
for the current year and the audit  procedures to be utilized;  reviews with the
independent auditors,  and financial and accounting personnel,  the adequacy and
effectiveness  of the  accounting  and  financial  controls of the Company;  and
reviews the financial  statements contained in the annual report to shareholders
with management and the independent auditors.

Pursuant to an exemption  for foreign  private  issuers,  we are not required to
comply with many of the corporate governance  requirements of the New York Stock
Exchange that are  applicable to U.S.  listed  companies.  A description  of the
significant  differences between our corporate  governance practices and the New
York Stock Exchange  requirements is available on our website  www.nat.bm  under
"Corporate Governance".

     D.     EMPLOYEES

As at  December  31,  2005,  the  Company  had one  full-time  employee  and one
part-time employee.

     E.     SHARE OWNERSHIP

The following table sets forth information  regarding the share ownership of the
Company  as of  June  26,  2006  by  its  directors  and  officers.  All  of the
shareholders are entitled to one vote for each share of common stock held.

Title        Identity of Person          No. of Shares        Percent of Class

Common       Herbjorn Hansson(1)          555,594                   2.64%
             Hon. Sir David Gibbons                                     *
             Thorbjorn Gladso                                           *
             Andrew  W. March                                           *
             Paul J. Hopkins                                            *
             George C. Lodge                                            *
             Andreas Ove Ugland(1)        520,594                   2.47%
             Turid M. Sorensen                                          *
             Rolf Amundsen                                              *

     (1) Includes 520,594 shares held by the Manager, of which Messrs. Hansson
         and Ugland are sole shareholders.

     *   Less than 1% of our outstanding shares of common stock.

ITEM 7.     MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

     A.     MAJOR SHAREHOLDERS

According to a Schedule 13G filed on March 31, 2005, Gilder,  Gagnon, Howe & Co.
LLC owned  748,559 or 5.9%,  as reported in that  Schedule 13G, of the Company's
common  shares.  According  to a Schedule  13G filed on June 30,  2005,  Gilder,
Gagnon, Howe & Co. LLC own 263,545 or 2.7%, as reported in that Schedule 13G, of
the Company's common shares.

     B.     RELATED PARTY TRANSACTIONS

Since May 30, 2003,  Scandic  American  Shipping Ltd., which is owned by Messrs.
Ugland and Hansson,  has been our Manager  pursuant to the Management  Agreement
with the Company. See Item 4--Information on the Company -- Business Overview --
The Management Agreement.

Mr. Jan Erik Langangen, Executive Vice President of the Manager, is a partner of
Langangen & Helset  Advokatfirma  AS which in the past has also provided and may
continue to provide legal services to us.

     C.     INTERESTS OF EXPERTS AND COUNSEL

            Not Applicable

ITEM 8.     FINANCIAL INFORMATION

     A.     CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

See Item 18

Legal Proceedings

To the best of the Company's knowledge, the Company is not currently involved in
any legal or arbitration proceedings that would have a significant effect on the
Company's  financial  position  or  profitability  and no such  proceedings  are
pending or known to be contemplated by governmental authorities.

Dividend Policy

Our policy is to declare  quarterly  dividends  to  shareholders,  substantially
equal to our net operating cash flow during the previous  quarter after reserves
as the Board of Directors may from time to time  determine are required,  taking
into account contingent  liabilities,  the terms of our New Credit Facility, our
other cash needs and the requirements of Bermuda law.  However,  if we declare a
dividend in respect of a quarter in which an equity issuance has taken place, we
calculate the dividend per share as our net operating  cash flow for the quarter
(after taking into account the factors  described above) divided by the weighted
average number of shares over that quarter.  Net operating cash flow  represents
net income plus depreciation and non-cash  administrative  charges. The dividend
paid is the  calculated  dividend per share  multiplied  by the number of shares
outstanding at the end of the quarter.

Total dividend paid out in 2005 was $64,279,487 or $4.21 per share. The dividend
payments per share in 2005, 2004, 2003, 2002 and 2001 have been as follows:


   Period                 2005        2004        2003        2002        2001
   1st Quarter           $1.62       $1.15       $0.63       $0.36       $1.41
   2nd Quarter            1.15        1.70        1.27        0.34        1.19
   3rd Quarter            0.84        0.88        0.78        0.33        0.72
   4th Quarter            0.60        1.11        0.37        0.32        0.55

   Total                 $4.21       $4.84       $3.05       $1.35       $3.87


The  dividend  paid out in a quarter  is based on the  results  of the  previous
quarter.

The Company declared a dividend of $1.88 per share for the first quarter of 2006
which was paid to  shareholders  in  February  2006.  In  addition,  the Company
declared a dividend of $1.58 per share for the second quarter of 2006, which was
paid to shareholders in May 2006.

     B.     SIGNIFICANT CHANGES

            Not applicable

ITEM 9.     THE OFFER AND LISTING

            Not applicable except for Item 9.A.4. and Item 9.C

Price Range of Common Shares

Since  November 16, 2004,  the primary  trading market for our common shares has
been the New York Stock  Exchange,  or the NYSE,  on which our shares are listed
under the symbol "NAT." The primary trading market for our common shares was the
American  Stock  Exchange,  or the AMEX,  until November 15, 2004, at which time
trading of our common shares on the AMEX ceased.  The secondary  trading  market
for our common shares was the Oslo Stock Exchange, or the OSE, until January 14,
2005, at which time trading of our common share on the OSE ceased.

The following table sets forth the high and low closing prices for shares of our
common  stock as reported by the New York Stock  Exchange,  the  American  Stock
Exchange and the Oslo Stock Exchange:

                 NYSE       NYSE       AMEX       AMEX       OSE          OSE
The year ended:  HIGH       LOW        HIGH       LOW        HIGH         LOW
--------------------------------------------------------------------------------
  2001            N/A        N/A     $22.89     $13.00   NOK 215.00   NOK 125.00
  2002            N/A        N/A     $16.55     $ 9.86   NOK 145.00   NOK  90.00
  2003            N/A        N/A     $16.90     $11.25   NOK 125.00   NOK  90.00
  2004         $41.30     $35.26     $41.59     $15.00   NOK 300.00   NOK 115.00
  2005 (1)     $56.68     $28.60        N/A        N/A   NOK 225.00   NOK 205.00


                         AMEX    AMEX    NYSE    NYSE       OSE           OSE
For the quarter ended:   HIGH    LOW     HIGH    LOW        HIGH          LOW
--------------------------------------------------------------------------------
March 31, 2004          $27.10  $15.00     N/A     N/A   NOK 179.00   NOK 115.00
June 30, 2004           $34.59  $21.25     N/A     N/A   NOK 225.00   NOK 160.00
September 30, 2004      $37.75  $25.00     N/A     N/A   NOK 249.00   NOK 210.00
December 31, 2004 (1)   $41.59  $31.15  $41.30  $35.26   NOK 300.00   NOK 214.00
March 31, 2005 (1)         N/A     N/A  $56.68  $35.95   NOK 225.00   NOK 205.00
June 30, 2005              N/A     N/A  $49.79  $37.48          N/A          N/A
September 30, 2005         N/A     N/A  $46.48  $37.30          N/A          N/A
December 31, 2005          N/A     N/A  $37.90  $28.60          N/A          N/A
--------------------------------------------------------------------------------

     (1)   The  AMEX  figures are based on trading  from the  beginning  of the
           quarter  through November 15, 2004 and the NYSE figures are based on
           trading  from November 16, 2004 through the end of the quarter.  The
           OSE numbers for 2005 are based on trading through January 14, 2005

The high and low market  prices for our common  shares by month  since  December
2005 have been as follows:


                                                 NYSE            NYSE
     For the month:                              HIGH            LOW
--------------------------------------------------------------------------------
     January 2006                               $32.50          $29.00
     February 2006                              $36.92          $28.83
     March 2006                                 $31.11          $27.90
     April 2006                                 $33.53          $28.50
     May 2006                                   $35.99          $29.65
     June 1 - June 26, 2006                     $35.58          $31.51

     C.     MARKETS

            See Item 9A above.

ITEM 10.    ADDITIONAL INFORMATION

     A.     SHARE CAPITAL

            Not Applicable

     B.     MEMORANDUM AND ARTICLES OF ASSOCIATION

The following  description of our capital stock summarizes the material terms of
our Memorandum of Association and our bye-laws.

Under our Memorandum of Association, as amended, our authorized capital consists
of 51,200,000 common shares having a par value of $0.01 per share.

The  purposes  and powers of the  Company  are set forth in Items 6 and 7 of our
Memorandum of  Association  and in  paragraphs  (b) to (n) and (p) to (u) of the
Second Schedule of the Bermuda Companies Act of 1981 (the "Companies Act") which
is attached  as an exhibit to our  Memorandum  of  Association.  These  purposes
include the entering into of any  guarantee,  contract,  indemnity or suretyship
and to assure,  support,  secure,  with or without the consideration or benefit,
the performance of any  obligations of any person or persons;  and the borrowing
and raising of money in any currency or  currencies  to secure or discharge  any
debt or obligation in any manner.

Our bye-laws  provide that our board of directors  shall convene and the Company
shall hold annual general  meetings in accordance  with the  requirements of the
Companies Act at such times and places as the Board shall  decide.  Our board of
directors  may call  special  meetings at its  discretion  or as required by the
Companies  Act.  Under the  Companies  Act,  holders of  one-tenth of our issued
common shares may call special meetings of shareholders.

Bermuda  law permits  the  bye-laws of a Bermuda  company to contain a provision
eliminating  personal  liability of a director or officer to the company for any
loss  arising  or  liability  attaching  to him by  virtue of any rule of law in
respect of any  negligence  default,  breach of duty or breach of trust of which
the officer or person may be guilty. Bermuda law also grants companies the power
generally to indemnify  directors and officers of the company if any such person
was or is a party or threatened  to be made a party to a threatened,  pending or
completed action,  suit or proceeding by reason of the fact that he or she is or
was a director  and officer of the company or was serving in a similar  capacity
for another entity at the company's request.

Our  bye-laws  do not  prohibit a director  from being a party to, or  otherwise
having an interest in, any  transaction  or  arrangement  with the Company or in
which the Company is otherwise interested.  Our bye-laws provide that a director
who has an interest in any  transaction or arrangement  with the Company and who
has complied with the provisions of the Companies Act and with our bye-laws with
regard  to  disclosure  of  such  interest   shall  be  taken  into  account  in
ascertaining  whether  a quorum  is  present,  and will be  entitled  to vote in
respect of any  transaction or  arrangement  in which he is so  interested.  Our
bye-laws  provide our board of  directors  the  authority to exercise all of the
powers of the Company to borrow  money and to mortgage or charge all or any part
of our property  and assets as  collateral  security for any debt,  liability or
obligation.  Our directors are not required to retire  because of their age, and
our  directors  are not required to be holders of our common  shares.  Directors
serve for one year  terms,  and shall  serve  until  re-elected  or until  their
successors are appointed at the next annual general meeting.

Our bye-laws provide that each director,  alternate director, officer, person or
member of a committee, if any, resident representative,  or his heirs, executors
or  administrators,  which we refer to  collectively  as an indemnitee,  will be
indemnified  and held harmless out of our funds to the fullest extent  permitted
by Bermuda law  against  all  liabilities,  loss,  damage or expense  (including
liabilities  under contract,  tort and statute or any applicable  foreign law or
regulation  and all  reasonable  legal and other  costs  and  expenses  properly
payable)  incurred  or  suffered by him as such  director,  alternate  director,
officer,  person or  committee  member  or  resident  representative  (or in his
reasonable  belief that he is acting as any of the  above).  In  addition,  each
indemnitee  shall be indemnified  against all liabilities  incurred in defending
any proceedings,  whether civil or criminal,  in which judgment is given in such
indemnitee's favor, or in which he is acquitted.

There are no pre-emptive, redemption, conversion or sinking fund rights attached
to our common shares.  The holders of common shares are entitled to one vote per
share on all matters  submitted to a vote of holders of common shares.  Unless a
different  majority  is required by law or by our  bye-laws,  resolutions  to be
approved by holders of common shares  require  approval by a simple  majority of
votes cast at a meeting at which a quorum is present.

Special rights  attaching to any class of our shares may be altered or abrogated
with the  consent in writing of not less than 75% of the issued and  outstanding
shares of that class or with the sanction of a  resolution  passed at a separate
general meeting of the holders of such shares voting in person or by proxy.

Our Memorandum of  Association  and our bye-laws may be amended upon the consent
of not less than two-thirds of the issued and outstanding common shares.

In the event of our  liquidation,  dissolution  or winding  up,  the  holders of
common shares are entitled to share in our assets,  if any,  remaining after the
payment  of  all  of our  debts  and  liabilities,  subject  to any  liquidation
preference on any outstanding preference shares.

Our bye-laws provide that our board of directors may, from time to time, declare
and pay dividends out of contributed  surplus.  Each common share is entitled to
dividends if and when dividends are declared by our board of directors,  subject
to any preferred dividend right of the holders of any preference shares.

There are no  limitations on the right of  non-Bermudians  or  non-residents  of
Bermuda to hold or vote our common shares.

Our bye-laws permit the Company to refuse to register the transfer of any common
shares  if the  effect  of  that  transfer  would  result  in 50% or more of our
aggregated issued share capital,  or 50% or more of the outstanding voting power
being held by persons who are  resident for tax purposes in Norway or the United
Kingdom.

Our bye-laws permit the Company to increase its capital, from time to time, with
the consent of not less than two-thirds of the  outstanding  voting power of the
Company's issued and outstanding common shares.


     C.     MATERIAL CONTRACTS

On May 30, 2003,  the Company's  shareholders  approved a novation  agreement by
which  the  Management  Agreement  was  novated  from  UNS  to our  Manager  and
thereafter the contract period was extended to 2019.

For a description of our New Credit  Facility,  see Item 4 -- Information on the
Company -- Business Overview -- Our Credit Facility.

Otherwise,  the Company has not entered into any material  contracts outside the
ordinary course of business during the past two years.

     D.     EXCHANGE CONTROLS

The Company  has been  designated  as a  non-resident  of Bermuda  for  exchange
control  purposes by the Bermuda  Monetary  Authority,  whose permission for the
issue of the Common Shares was obtained prior to the offering thereof.

The transfer of shares between persons  regarded as resident outside Bermuda for
exchange  control  purposes  and the  issuance  of  Common  Shares to or by such
persons may be effected  without  specific  consent  under the Bermuda  Exchange
Control Act of 1972 and regulations  thereunder.  Issues and transfers of Common
Shares involving any person regarded as resident in Bermuda for exchange control
purposes  require specific prior approval under the Bermuda Exchange Control Act
1972.

Subject to the  foregoing,  there are no  limitations on the rights of owners of
the Common  Shares to hold or vote their  shares.  Because  the Company has been
designated as non-resident for Bermuda exchange control  purposes,  there are no
restrictions  on its ability to  transfer  funds in and out of Bermuda or to pay
dividends to United States residents who are holders of the Common Shares, other
than in respect of local Bermuda currency.

In accordance  with Bermuda law,  share  certificates  may be issued only in the
names of corporations or  individuals.  In the case of an applicant  acting in a
special capacity (for example, as an executor or trustee),  certificates may, at
the request of the  applicant,  record the  capacity in which the  applicant  is
acting.  Notwithstanding the recording of any such special capacity, the Company
is not bound to investigate or incur any responsibility in respect of the proper
administration of any such estate or trust.

The Company will take no notice of any trust  applicable to any of its shares or
other securities whether or not it had notice of such trust.

As an "exempted company", the Company is exempt from Bermuda laws which restrict
the  percentage of share capital that may be held by  non-Bermudians,  but as an
exempted   company,   the  Company  may  not  participate  in  certain  business
transactions  including:  (i) the  acquisition  or  holding  of land in  Bermuda
(except  that  required for its business and held by way of lease or tenancy for
terms of not more  than 21  years)  without  the  express  authorization  of the
Bermuda  legislature;  (ii) the taking of mortgages on land in Bermuda to secure
an amount in excess of $50,000 without the consent of the Minister of Finance of
Bermuda;  (iii) the  acquisition  of  securities  created  or issued  by, or any
interest in, any local company or business,  other than certain types of Bermuda
government  securities  or  securities of another  "exempted  company,  exempted
partnership  or  other  corporation  or  partnership  resident  in  Bermuda  but
incorporated abroad; or (iv) the carrying on of business of any kind in Bermuda,
except in so far as may be necessary for the carrying on of its business outside
Bermuda or under a license granted by the Minister of Finance of Bermuda.

There is a statutory  remedy under  Section 111 of the  Companies Act 1981 which
provides  that a shareholder  may seek redress in the Bermuda  courts as long as
such  shareholder can establish that the Company's  affairs are being conducted,
or have been conducted,  in a manner  oppressive or prejudicial to the interests
of some part of the  shareholders,  including such  shareholder.  However,  this
remedy has not yet been interpreted by the Bermuda courts.

The Bermuda  government  actively  encourages  foreign  investment in "exempted"
entities  like the  Company  that are based in  Bermuda  but do not  operate  in
competition  with local  business.  In addition to having no restrictions on the
degree of foreign  ownership,  the  Company  is subject  neither to taxes on its
income or dividends nor to any exchange controls in Bermuda. In addition,  there
is no capital  gains tax in  Bermuda,  and  profits  can be  accumulated  by the
Company, as required, without limitation.  There is no income tax treaty between
the United  States and Bermuda  pertaining  to the taxation of income other than
applicable to insurance enterprises.

     E.     TAXATION

The Company is incorporated  in Bermuda.  Under current Bermuda law, the Company
is not subject to tax on income or capital gains, and no Bermuda withholding tax
will be imposed upon  payments of dividends by the Company to its  shareholders.
No Bermuda  tax is imposed on holders  with  respect to the sale or  exchange of
Shares.  Furthermore,  the Company has received  from the Minister of Finance of
Bermuda under the Exempted  Undertakings Tax Protection Act 1966, as amended, an
assurance  that, in the event that Bermuda enacts any  legislation  imposing any
tax  computed on profits or income,  including  any  dividend  or capital  gains
withholding tax, or computed on any capital asset,  appreciation,  or any tax in
the nature of an estate,  duty or  inheritance  tax, then the  imposition of any
such tax shall not be  applicable.  The  assurance  further  provides  that such
taxes, and any tax in the nature of estate duty or inheritance tax, shall not be
applicable  to  the  Company  or  any of  its  operations,  nor  to the  shares,
debentures or other obligations of the Company, until March 2016.

     F.     DIVIDENDS AND PAYING AGENTS

            Not Applicable

     G.     STATEMENT BY EXPERTS

            Not Applicable

     H.     DOCUMENTS ON DISPLAY

The  Company is  subject to the  informational  requirements  of the  Securities
Exchange Act of 1934, as amended.  In accordance with these requirements we file
reports and other information with the Securities and Exchange Commission. These
materials,  including  this annual report and the  accompanying  exhibits may be
inspected  and  copied at the  public  reference  facilities  maintained  by the
Commission  at 100 F Street,  NE, Room 1580,  Washington,  D.C.  20549.  You may
obtain  information  on the operation of the public  reference room by calling 1
(800)  SEC-0330,  and you may obtain copies at prescribed  rates from the Public
Reference Section of the Commission at its principal office in Washington,  D.C.
The SEC maintains a website  (http://www.sec.gov.)  that contains reports, proxy
and information statements and other information regarding registrants that file
electronically  with the SEC. In addition,  documents referred to in this annual
report may be inspected at the Company's headquarters at Thistle House 4 Burnaby
Street Hamilton, HM11 Bermuda.

We furnish holders of our common shares with annual reports  containing  audited
financial  statements and a report by our independent  public  accountants,  and
intend  to  make  available  quarterly  reports  containing  selected  unaudited
financial  data for the first three  quarters of each fiscal  year.  The audited
financial statements will be prepared in accordance with United States generally
accepted  accounting  principles.  As a "foreign  private issuer," we are exempt
from the rules under the Securities  Exchange Act prescribing the furnishing and
content of proxy  statements to  shareholders.  While we intend to furnish proxy
statements to  shareholders  in accordance  with the rules of the New York Stock
Exchange,  those proxy  statements  do not conform to Schedule  14A of the proxy
rules  promulgated  under the Exchange Act. All reports,  proxy  statements  and
other  information filed by us with the New York Stock Exchange may be inspected
at the New York Stock Exchange's  offices at 20 Broad Street, New York, New York
10005. In addition,  as a "foreign private issuer," we are exempt from the rules
under the Exchange Act relating to short swing profit reporting and liability.

     I.     SUBSIDIARY INFORMATION

            Not applicable.

ITEM 11.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk from changes in interest  rates related to
the variable rate of the Company's borrowings,  or the Loan under our New Credit
Facility.

Amounts borrowed under the New Credit Facility bears interest at a rate equal to
LIBOR plus a margin  between  0.70% to 1.20% per year  (depending on the loan to
vessel  value  ratio).   Increasing  interest  rates  could  affect  our  future
profitability.  In certain  situations,  the  Company  may enter into  financial
instruments to reduce the risk associated with fluctuations in interest rates.

A 100 basis  point  increase  in LIBOR  would have  resulted  in an  increase of
approximately  $0.4 million in our interest  expense for the year ended December
31, 2005.

The Company is exposed to the spot market. Historically, the tanker markets have
been volatile as a result of the many conditions and factors that can affect the
price,   supply  and  demand  for  tanker   capacity.   Changes  in  demand  for
transportation  of oil over longer distances and supply of tankers to carry that
oil may materially affect our revenues,  profitability and cash flows.  Eight of
our nine  vessels  are  currently  operated in the spot market or on spot market
related time  charters.  We believe that over time,  spot  employment  generates
premium earnings compared to longer-term employment.

We estimate  that during 2005, a $1,000 per day decrease in the spot market rate
would have decreased our voyage revenue by approximately $1.8 million.

ITEM 12.    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

            Not Applicable

                                     PART II

ITEM 13.    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

            Not Applicable

ITEM 14.    MATERIAL  MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
            PROCEEDS

            Not Applicable

ITEM 15.    CONTROLS AND PROCEDURES.

We  evaluated  the  effectiveness  of  the  Company's  disclosure  controls  and
procedures as December 31, 2005. Based on that  evaluation,  the chief executive
officer and the chief financial officer concluded that the Company's  disclosure
controls and procedures were effective to provide reasonable  assurance that the
information  required to be disclosed by the Company in reports  filed under the
Securities Exchange Act of 1934, as amended, is recorded, processed,  summarized
and reported within the time periods specified in the SEC's rules and forms. The
Company  believes  that a system of  controls,  no matter how well  designed and
operated,  cannot provide absolute assurance that the objectives of the controls
are met, and no evaluation of controls can provide  absolute  assurance that all
control  issues  and  instances  of fraud,  if any,  within a company  have been
detected.

or

There  have been no changes in  internal  controls  over  financial  reporting
(identified in connection with management's evaluation of such internal controls
over financial  reporting)  that occurred during the year covered by this annual
report that has  materially  affected,  or is  reasonably  likely to  materially
affect, the Company's internal controls over financial reporting.


ITEM 16.    RESERVED.

ITEM 16A.   AUDIT COMMITTEE FINANCIAL EXPERT

The Board of  Directors  has  determined  that Mr.  Torbjorn  Gladso is an audit
committee  financial  expert.  Mr.  Gladso is  "independent"  as  determined  in
accordance with the rules of the New York Stock Exchange.

ITEM 16B.   CODE OF ETHICS.

The Company has  adopted a code of ethics that  applies to all of the  Company's
employees,  including  our principal  executive  officer,  principal  accounting
officer or controller.  The Code may be downloaded at our website  (www.nat.bm).
Additionally,  any person,  upon request,  may ask for a hard copy of electronic
file of the Code. If we make any substantive  amendment to the Code of Ethics or
grant any waivers,  including any implicit waiver,  from a provision of our Code
of  Ethics,  we will  disclose  the  nature of that  amendment  or waiver on our
website.  During the year ended December 31, 2005, no such amendment was made or
waiver granted.

ITEM 16C.   PRINCIPAL ACCOUNTANT FEES AND SERVICES.

     (a)    Audit Fees

The Company's Board of Directors has established  preapproval and procedures for
the  engagement of the Company's  independent  public  accounting  firms for all
audit and non-audit  services.The  following table sets forth,  for the two most
recent  fiscal  years,  the  aggregate  fees  billed for  professional  services
rendered by our principal accountant,  Deloitte  Statsautoriserte  Revisorer AS,
for the audit of the Company's annual financial statements and services provided
by the principal  accountant in connection with statutory and regulatory filings
or engagements for the two most recent fiscal years.

FISCAL YEAR ENDED DECEMBER 31, 2005                 $71,400
FISCAL YEAR ENDED DECEMBER 31, 2004                 $49,700

     (b)    Audit-Related Fees (1)

FISCAL YEAR ENDED DECEMBER 31, 2005                $150,455
FISCAL YEAR ENDED DECEMBER 31, 2004                 $90,400

     (1)   Audit-Related-Fees  consists of accounting  consultations  related to
           accounting,  financial reporting or disclosure matters not classified
            as "Audit Services".

     (c)    Tax Fees

            Not applicable


     (d)    All Other Fees

            Not applicable.

     (e)    Audit Committee's Pre-Approval Policies and Procedures

Our audit committee pre-approves all audit, audit-related and non-audit services
not prohibited by law to be performed by our independent auditors and associated
fees prior to the  engagement  of the  independent  auditor with respect to such
services.

     (f)    Not applicable.

ITEM 16D.   EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

            Not Applicable

ITEM 16E.   PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PERSONS.

            Not Applicable

                                    PART III

ITEM 17.    FINANCIAL STATEMENTS

            See item 18.


ITEM 18.    FINANCIAL STATEMENTS

            See pages F-1 through F-11

<PAGE>

NORDIC AMERICAN TANKER SHIPPING LIMITED

TABLE OF CONTENTS
--------------------------------------------------------------------------------
                                                                           Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS                         F-2

FINANCIAL STATEMENTS                                                        F-3


Balance Sheets                                                              F-3

Statements of Operations                                                    F-4

Statements of Cash Flows                                                    F-5

Statements of Shareholders' Equity                                          F-6

Notes to Financial Statements                                               F-7

<PAGE>

To the shareholders of Nordic American Tanker Shipping Limited


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and  Stockholders  of Nordic  American Tanker Shipping
Limited Bermuda

We have  audited  the  accompanying  balance  sheets of Nordic  American  Tanker
Shipping Ltd. (the  "Company") as of December 31, 2005 and 2004, and the related
statements of operations, statements of shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 2005.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company has determined that it
is not  required  to  have,  nor were we  engaged  to  perform,  an audit of its
internal control over financial reporting.  Our audits included consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the  effectiveness  of the Company's  internal  control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial statement  presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the  financial  position of the  Company as of December  31, 2005 and
2004,  and the results of their  operations and their cash flows for each of the
three years in the period ended December 31, 2005, in conformity with accounting
principles generally accepted in the United States of America.


Oslo, Norway, May 18, 2006
Deloitte Statsautoriserte Revisorer AS

<PAGE>

BALANCE SHEETS

All figures in USD
                                  Notes       Dec. 31, 2005       Dec. 31, 2004
--------------------------------------------------------------------------------
Assets
Current Assets
Cash and Cash Equivalents                        14,240,482          30,732,516
Accounts Receivables, net           4            19,556,725           4,539,354
Voyages in Progress                               2,445,906                   0
Prepaid Expenses and Other Assets   5             3,147,527           1,479,710

Total Current Assets                             39,390,640          36,751,580
                                               ---------------------------------

Long-term Assets
Vessels, net                        6           463,933,101         187,301,038
Other Long-term Assets                            2,520,712             150,793

Total Long-term Assets                          466,453,813         187,451,831
                                               ---------------------------------
Total Assets                                    505,844,453         224,203,411
                                               ---------------------------------

Liabilities and Shareholders' Equity
Current Liabilities
Accounts Payable                                  1,562,188             411,366
Deferred Revenue                   11               537,055           1,286,070
Accrued Liabilities                               2,873,039             637,582

Total Current Liabilities          12             4,972,282           2,335,018
                                               ---------------------------------

Long-term Liabilities
Long-term Debt                      9           130,000,000                   0

Total Long-term Liabilities                     130,000,000                   0
                                               ---------------------------------

Shareholders' Equity
Common Shares,                     13               166,445             130,678
par value $0.1 per share,
issued and outstanding
(51,200,000 shares authorized);
16,644,496 shares issued and
outstanding, (13,067,838 issued
and outstanding in 2004)

Additional Paid-in Capital                      432,682,337         265,752,581
Accumulated Deficit                             (61,976,611)        (44,014,866)

Total Shareholders' Equity                      370,872,171         221,868,393

Total Liabilities & Shareholders' Equity        505,844,453         224,203,411
                                               ---------------------------------

     The footnotes are an integral part of these financial statements

<PAGE>

STATEMENTS OF OPERATIONS

All figures in USD
                                                Year Ended December 31,
                                 Notes       2005          2004          2003
--------------------------------------------------------------------------------
Voyage Revenue                     3    117,110,178    67,451,598    37,370,756
Voyage Expenses                         (30,980,916)   (4,925,353)     (184,781)
Vessel Operating Expenses -
 excluding depreciation
 expense presented below                (11,220,770)   (1,976,766)            0
Administrative Expenses           2,7    (8,492,164)  (10,851,688)     (468,087)
Depreciation                       6    (17,529,000)   (6,918,164)   (6,831,040)

Net Operating Income                     48,887,328    42,779,627    29,886,848
                                       -----------------------------------------

Interest Income                             850,803       143,230        26,462
Interest Expense                 9,10    (3,453,963)   (1,971,304)   (1,797,981)
Other Financial Income (Charges)             33,574      (135,621)      (15,040)

Net Financial Items                      (2,569,586)   (1,963,695)   (1,786,559)
                                       -----------------------------------------
Net profit before Tax                    46,317,742    40,815,932    28,100,289
                                       -----------------------------------------
Tax Expense                                       0             0             0

Net Profit for the Year                  46,317,742    40,815,932    28,100,289
                                       -----------------------------------------

Basic Earnings per Share                       3.03          4.05          2.89

Diluted Earnings per Share                     3.03          4.05          2.89
Basic Weighted Average Number
 of Shares Outstanding                   15,263,622    10,078,391     9,706,606
Diluted Weighted Average Number
 of Shares Outstanding                   15,263,622    10,078,391     9,706,606

     The footnotes are an integral part of these financial statements

<PAGE>


STATEMENTS OF CASH FLOWS

All figures in USD
                                                 Year Ended December 31,
                                             2005          2004          2003
--------------------------------------------------------------------------------
Cash Flows from Operating Activities

Net Profit                               46,317,742    40,815,932    28,100,289

Reconciliation of Net Profit to
Net Cash from
Operating Activities
Depreciation                             17,529,000     6,918,164     6,831,040
Amortization of Prepaid Finance Costs       717,910       112,838        14,480
Share-based Compensation                  3,582,995     9,252,365             0
Stock Incentive Plan                      1,415,000             0             0
Increase/Decrease in:
Accounts Receivables                    (15,017,371)    3,602,956    (4,865,784)
Accounts Payable and Accrued Liabilities  3,386,273     1,010,626      (178,140)
Deferred Revenue                           (749,015)    1,286,075             0
Other Assets                             (6,126,946)     (181,695)       (8,334)

Net Cash Provided by Operating
 Activities                              51,055,588    62,817,261    29,893,551
                                       -----------------------------------------
Cash Flows from Investing Activities
Investment in Vessels                  (294,161,063)  (66,137,277)            0

Net Cash Used in Investing Activities  (294,161,063)  (66,137,277)            0
                                       -----------------------------------------

Cash Flows from Financing Activities
Proceeds from Issuance of Common Stock  161,967,534   112,137,953             0
Proceeds from Use of Credit Facility    135,000,000    96,000,000             0
Repayments of Credit Facility            (5,000,000) (126,000,000)            0
Loan Facility Costs                      (1,074,606)   (1,455,503)            0
Dividends Paid                          (64,279,487)  (47,195,842)  (29,605,410)

Net Cash Provided by (Used in)
 Financing Activities                   226,613,441    33,486,608   (29,605,410)
                                       -----------------------------------------
Net (Decrease) Increase in Cash,
 and Cash Equivalent                    (16,492,034)   30,166,592       288,141
                                       -----------------------------------------
Beginning Cash and Cash Equivalents      30,732,516       565,924       277,783
                                       -----------------------------------------
Ending Cash and Cash Equivalents         14,240,482    30,732,516       565,924
                                       -----------------------------------------

Cash paid for Interest                      916,104     1,774,264     1,975,125


     The footnotes are an integral part of these financial statements

<PAGE>

<TABLE>

STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION>
All figures in USD, except where noted

                                                                                         Accumulated
                                                              Additional                    Other           Total        Total
                                        No. of     Common      Paid-in    Accumulated   Comprehensive   Shareholders'  Comprehensive
                                        Shares     Shares      Capital      Deficit          Loss          Equity       Income
------------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>         <C>        <C>          <C>            <C>            <C>            <C>
Balance at 01.01.03                    9,706,606   97,066    144,395,866   (36,129,835)   (2,016,000)   106,347,097

Net Profit                                                                  28,100,289                   28,100,289   28,100,289

Unrealized Loss on
Derivative Instruments                                                                      (365,723)      (365,723)    (365,723)

Adjustment for Losses on
Derivatives Reclassified to Earnings                                                       1,231,723      1,231,723    1,231,723

Dividend Paid                                                              (29,605,410)                 (29,605,410)

Total Comprehensive Income                                                                                            28,966,289
------------------------------------------------------------------------------------------------------------------------------------
Balance at 12.31.03                    9,706,606   97,066    144,395,866   (37,634,956)   (1,150,000)   105,707,976
------------------------------------------------------------------------------------------------------------------------------------

Net Profit                                                                  40,815,932                   40,815,932   40,815,932

Common Shares Issued                   3,361,232   33,612    121,356,715                                121,390,327

Unrealized Loss on
Derivative Instruments                                                                       (20,710)       (20,710)     (20,710)

Adjustment for Losses on
Derivatives Reclassified to Earnings                                                       1,170,710      1,170,710    1,170,710

Dividend Paid                                                              (47,195,842)                 (47,195,842)

Total Comprehensive Income                                                                                            41,965,932
------------------------------------------------------------------------------------------------------------------------------------
Balance at 12.31.04                   13,067,838  130,678    265,752,581   (44,014,866)            0    221,868,393
------------------------------------------------------------------------------------------------------------------------------------

Net Profit                                                                  46,317,742                   46,317,742   46,317,742

Common Shares Issued                   3,576,658   35,767    165,514,756                                165,550,523

Stock Option Plan Valuation                                    1,415,000                                  1,415,000

Dividend Paid                                                              (64,279,487)                 (64,279,487)

Total Comprehensive Income                                                                                            88,283,674
------------------------------------------------------------------------------------------------------------------------------------
Balance at 12.31.05                   16,644,496  166,445    432,682,337   (61,976,611)            0    370,872,171
------------------------------------------------------------------------------------------------------------------------------------

                                 The footnotes are an integral part of these financial statements
</TABLE>

<PAGE>



                     NORDIC AMERICAN TANKER SHIPPING LIMITED

                          NOTES TO FINANCIAL STATEMENTS


1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These  financial  statements  have been prepared in accordance  with  accounting
principles generally accepted in the United States of America (US GAAP).

Nature of Business:  The principal  business of Nordic  American Tanker Shipping
Limited (the "Company") is to own and operate crude oil tankers.

Use of Estimates:  Preparation of financial  statements in accordance  with U.S.
GAAP  necessarily  includes  amounts based on estimates and assumptions  made by
management.  Actual  results  could  differ from those  amounts.  The effects of
changes in  accounting  estimates  are  accounted  for in the same period as the
estimates are changed.

Concentration of Credit Risk: Financial instruments that potentially subject the
Company  to  concentrations  of  credit  risk  consist  principally  of cash and
accounts  receivable.  The Company  maintains its cash with reputable  financial
institutions.  The terms of these  deposits are on demand to minimize  risk. The
Company  has not  experienced  any losses  related to these  cash  deposits  and
believes it is not exposed to any significant credit risk.

Accounts receivable consist of  uncollateralized  receivables from international
customers  primarily in the international  shipping  industry.  To minimize risk
associated with  international  transactions,  all sales are denominated in U.S.
currency.   The  Company  routinely  assesses  the  financial  strength  of  its
customers.  Accounts  receivable  are presented  net of allowances  for doubtful
accounts  relating to demurrage claims.  If amounts become  uncollectible,  they
will be charged to operations when that determination is made.

Interest  Rate Risk:  The Company is exposed to interest  rate risk for its debt
borrowed under the New Credit Facility.  In certain situations,  the Company may
enter into financial instruments to reduce the risk associated with fluctuations
in interest  rates.  The Company has no outstanding  derivatives at December 31,
2005 and has not entered into any such arrangements in 2005.

Cash and Cash  Equivalents:  Cash and cash equivalents  consist of deposits with
original maturities of three months or less.

Foreign Currency Risk: The Company's  functional  currency is the U.S. dollar as
all  revenues are  received in U.S.  dollars and the  majority of the  Company's
expenditures are made in U.S. dollars.  The Company's reporting currency is U.S.
dollars. The Company considers currency risk to be insignificant.

Property and Equipment:  Depreciation is provided on a straight-line  basis over
the estimated useful lives of the assets.  The Company's  property and equipment
are  recorded at the cost method and consist  solely of vessels.  The  estimated
useful  life of the  Company's  vessels  is 25 years from the date the vessel is
delivered from the shipyard. Repairs and maintenance are expensed as incurred.

Impairment of Long-Lived  Assets:  Long-lived assets are required to be reviewed
for impairment  whenever  events or changes in  circumstances  indicate that the
carrying  amount  of  an  asset  may  not  be  recoverable.   If  the  estimated
undiscounted  future cash flows expected to result from the use of the asset and
its  eventual  disposition  is less than the carrying  amount of the asset,  the
asset is deemed  impaired.  The  amount of the  impairment  is  measured  as the
difference between the carrying value and the fair value of the asset.

Revenue and expense  recognition:  Revenue and expense recognition  policies for
voyage and time charter agreements are as follows:

Bareboat:  Revenues from bareboat  charters are recorded at a fixed  charterhire
rate per day over the term of the charter. The charterhire is payable monthly in
advance.  During  the  charter  period the  charterer  will be  responsible  for
operating and  maintaining  the vessel and will bear all costs and expenses with
respect to the vessel.

Time charters  under spot related  terms:  The revenue from time charters  under
spot related terms payable under the charters is based on a formula  designed to
generate  earnings to the Company as if the Company had  operated the vessels in
the spot market on two routes used for the calculation, less 5% in commission to
the charterer.  The charterhire is payable to the Company monthly. The charterer
is responsible for all voyage related costs while the Company is responsible for
providing the crew and paying other operating costs

Spot charters.  Voyage revenues and voyage expenses are recognized on a pro rata
basis based on the relative  transit time in each  period.  Estimated  losses on
voyages are  provided  for in full at the time such  losses  become  evident.  A
voyage is deemed to commence  upon the  completion  of discharge of the vessel's
previous  cargo and is deemed to end upon the  completion  of  discharge  of the
current cargo. Voyage expenses primarily include only those specific costs which
are  borne by the  Company  in  connection  with  voyage  charters  which  would
otherwise have been borne by the charterer under time charter agreements.  These
expenses  principally consist of fuel, canal and port charges.  Demurrage income
represents  payments  by the  charterer  to the vessel  owner when  loading  and
discharging  time exceed the stipulated  time in the voyage  charter.  Demurrage
income is measured in accordance  with the provisions of the respective  charter
agreements  and the  circumstances  under which  demurrage  claims  arise and is
recognized  on a pro  rata  basis  over the  length  of the  voyage  to which it
pertains. At December 31, 2005 and 2004, the Company has no reserves against its
due from charterers balance associated with demurrage revenues.

Pooling  arrangements:  Revenues and voyage expenses of the vessels operating in
pool arrangements are pooled and the resulting net pool revenues,  calculated on
a  time  charter  equivalent  basis,  are  allocated  to the  pool  participants
according to an agreed formula. Formulas used to allocate net pool revenues vary
among different pools but generally  allocate  revenues to pool  participants on
the basis of the  number of days a vessel  operates  in the pool with  weighting
adjustments  made to  reflect  vessels'  differing  capacities  and  performance
capabilities.  The same revenue and expenses principles stated above are applied
in determining  the pool's net pool revenues.  The pool managers are responsible
for collecting voyage revenue,  paying voyage expenses and distributing net pool
revenues to the participants.

Based on the guidance from EITF 99-19 earnings generated from pools in which the
Company is the principal of the pool's vessels' activities are recorded based on
gross method. Earnings generated from pools in which the Company is not regarded
as the principal of the vessels' activities are recorded as per net method.

The  Company  accounts  for the net pool  revenues  allocated  by these pools as
"Voyage Revenue" in its statements of operations.

Vessel Operating Expenses: Vessel Operating Expenses include crewing, repair and
maintenance,  insurance,  stores,  lube oils and communication  expenses.  These
expenses are recognized when incurred.

Accounting  for  Drydocking  Costs:  The  Company's  vessels are  required to be
drydocked  approximately every 30 to 60 months for major repairs and maintenance
that cannot be performed while the vessels are in operation. The Company follows
the deferral  method of accounting  for  drydocking  costs whereby  actual costs
incurred are deferred and are amortized on a straight-line basis over the period
through the date the next  drydocking  is scheduled  to become due.  Unamortized
drydocking  costs of vessels that are sold are written off to income in the year
of the vessel's sale.  The  capitalized  and  unamortized  drydocking  costs are
included  in  the  book  value  of  the  vessels.  Amortization  expense  of the
drydocking costs is included in depreciation expense.

Inventories:  Inventories, which comprise principally of bunker fuel, are stated
at cost which is determined on a first-in, first-out (FIFO) basis.

Financial Instruments: The fair values of cash and cash equivalents,  short-term
investments,  accounts  receivable,  and accounts payable  approximate  carrying
value because of the short-term nature of these instruments.

Loan Financing  costs:  Finance costs,  including  fees,  commissions  and legal
expenses, which are presented as other assets are capitalized and amortized on a
straight-line basis over the term of the relevant Credit Facility.  Amortization
of finance costs is included in interest expense.

Segment Information: The Company has identified only one operating segment under
Statement of Financial  Accounting  Standards  ("SFAS") No. 131  "Segments of an
Enterprise and Related  Information."  The Company has only one type of vessel -
Suezmax  crude oil  tankers -  operating  on time  charter  contracts  at market
related rates, in the spot market and on long-term bareboat contract.

Geographical Segment: The Company currently operates four of its vessels in spot
market pools with other  vessels that are not owned by it. The pools are managed
by third  party pool  administrators.  The  earnings  of all of the  vessels are
aggregated,  or  pooled,  and  divided  according  to the  relative  performance
capabilities of the vessel and the actual earning days each vessel is available.
The pool vessels are operated in the spot market by the pool administrators.  As
a significant  portion of the Company's  vessels are operated in pools it is not
practical  to allocate  geographical  data to each vessel and thereby not giving
meaningful information to the reader.

Derivative  Instruments  and Hedging  Activities:  The Company  accounts for its
derivative  instruments  and  hedging  activities  according  to SFAS  No.  133,
"Accounting for Derivative  Instruments and Hedging  Activities",  as amended by
SFAS No. 137 and SFAS No. 138. This standard,  as amended,  requires  derivative
instruments to be recorded in the balance sheet at their fair value.  Changes in
the fair value of derivatives that do not qualify for hedge  treatment,  as well
as ineffective portions of any hedge, are recorded to earnings.  Changes in fair
value for qualifying cash flow-hedges are recorded in equity and are realized in
earnings in conjunction with the gain or loss on the hedged item or transaction.

Changes in the fair value of qualifying hedges offset  corresponding  changes in
the fair value of the hedged item in the statement of operations.

Share-Based  Compensation:   The  Company  has  chosen  early  adoption  of  the
accounting  standard  No.  123 (R)  "Share-Based  Payment"  ("SFAS123R"),  which
establishes a fair value-based method of accounting for share-based compensation
plans.  The adoption of the standard did not have any significant  effect on the
financial  statements as the Company  previously  used the SFAS 123. The Company
applied the modified prospective method.

Earnings per Share: SFAS No. 128 "Earnings Per Share ("EPS"),"requires EPS to be
computed and  reported as both basic EPS and diluted EPS.  Basic EPS is computed
by  dividing  net  income  by the  weighted  average  number  of  common  shares
outstanding  for the period.  Diluted EPS is computed by dividing  net income by
the  weighted  average  number  of  common  shares  and  dilutive  common  stock
equivalents (i.e. stock options, warrants) outstanding during the period.

The  Company's  average  stock price during 2005 was above the average  exercise
price of the  options  and a  dilutive  effect on EPS could  potentially  arise.
However,  the proceeds of an exercise of all outstanding  options  calculated as
per the Treasury Stock Method would exceed the costs of acquiring  shares at the
average 2005 stock price.  The potential  effect of the  outstanding  options is
therefore anti-dilutive and is not included in the numbers stated above.

Income taxes: The Company is incorporated in Bermuda. Under current Bermuda law,
the Company is not subject to corporate income taxes.

Reclassifications:  Certain  amounts on the balance  sheets and the statement of
operations in prior year financial accounts have been reclassified to conform to
the current year presentation.

New  Pronouncements:  In December 2004, the FASB issued SFAS No. 153, "Exchanges
of  Non-monetary  Assets",  an  amendment of APB Opinion No. 29. The adoption of
this  statement,  effective  June 2005, did not have any impact on the Company's
results of operations, financial position or cash flows.

In May 2005, the Financial  Accounting Standards Board ("FASB") issued Statement
("SFAS") No. 154,  "Accounting  Changes and Error  Corrections",  effective  for
accounting  changes and  corrections  of errors made in fiscal  years  beginning
after  December 15,  2005.  SFAS 154 requires  voluntary  changes in  accounting
principle be  retrospectively  applied to  financial  statements  from  previous
periods  unless  such  application  is  impracticable.  Under the  newly  issued
standard  changes in  depreciation,  amortization,  or depletion for long-lived,
non-financial  assets should be accounted for as a change in accounting estimate
that is affected by a change in accounting principle.  The Company believes that
the adoption of this standard  will not have a material  impact on the Company's
results of operations, financial position or cash flow.

2.      RELATED PARTY TRANSACTIONS

The Manager,  Scandic  American  Shipping Ltd., is jointly owned by the Chairman
and CEO of the Company,  Mr. Herbjorn Hansson,  and a Board Member,  Mr. Andreas
Ove Ugland. The Manager, under the Management Agreement,  assumes commercial and
operational  responsibility  of the Company's  vessels and is required to manage
the Company's  day-to-day business subject,  always, to the Company's objectives
and policies as established from time to time by the Board of Directors. For its
services  under the Management  Agreement,  the Manager is entitled to cover the
cost  incurred  plus a management  fee equal to $100,000 per annum.  The Manager
also has a right to 2% of the  Company's  total  outstanding  shares (see Note 8
"Share-Based   Compensation").   The  Company  has  recognized  total  costs  of
$2,196,264 for the services provided under the Management Agreement for the year
ended December 31, 2005. The comparable  amount for the years 2004 and 2003 were
$653,799 and $0 respectively.  Additionally the Company recognized $3,582,995 in
non-cash  share-based  compensation  expense during the year 2005 related to the
issuance of shares to the Manager (see Note 8 "Share-Based  Compensation").  The
comparable   amount  for  the  years  2004  and  2003  was  $9,252,365  and  $0,
respectively.  Payable at December 31, 2005 was $396,314 and payable at December
31, 2004 was  $105,080.  These items are included in the accounts  payable.  The
costs are included in administrative expenses.

Mr. Jan Erik Langangen, Executive Vice President of the Manager, is a partner of
Langangen & Helset  Advokatfirma  AS which in the past has also provided and may
continue to provide legal  services to us. The Company has  recognized  costs of
$77,526 for the services provided by Langangen & Helset Advokatfirma AS in 2005.
The  comparable  amount  for the  years  2004 and 2003 was  $33,435  and  $3,361
respectively.  Payable at December  31, 2005 was $0 and payable at December  31,
2004 was $38,157. These costs are included as administrative expenses.

3.      REVENUE

For the twelve  months  ending  December 31, 2005 the  Company's  only source of
income was from the Company's  eight vessels.  The table below shows the current
employment  of  the  vessels.  All of  the  Company's  revenues  are  earned  in
international markets.

                                                         Charterer*/
Vessel name                       Employment             Commercial Operator
----------------------------------------------------------------------------

Gulf Scandic                      Bareboat               Gulf Navigation*
Nordic Hawk                       Spot / TC              BP Shipping*
Nordic Hunter                     Spot / TC              BP Shipping*
Nordic Freedom                    Spot                   Teekay Shipping
Nordic Voyager                    Spot                   Stena Bulk
Nordic Fighter                    Spot                   Frontline
Nordic Discovery                  Spot                   Frontline
Nordic Saturn                     Spot                   OMI
----------------------------------------------------------------------------

One customer  accounted for 37%, 97% and 100% of the Company's  revenues  during
the year ended December 31, 2005, 2004 and 2003, respectively.

4.      ACCOUNTS RECEIVABLE

                                                   2005                 2004
     ---------------------------------------------------------------------------
     BP Shipping                                 4,030,009            4,310,979
     Gulf Navigation Company                             0              189,114
     Gemini Tankers Ltd                          2,725,145                    0
     Stena Bulk                                  5,192,581                    0
     Frontline                                   4,628,353                    0
     Teekay Shipping Corporation                 2,980,637                    0
     Others < 10%                                        0               39,261
     ---------------------------------------------------------------------------
     Total Accounts Receivable                  19,556,725            4,539,354

There is no allowance for doubtful accounts as at December 31, 2005 and 2004.

5.      PREPAID EXPENSES AND OTHER CURRENT ASSETS

                                                   2005                 2004
     ---------------------------------------------------------------------------
     Bunkers and lubricants inventory            2,136,762                    0
     Other < 5%                                  1,010,765            1,479,710
     ---------------------------------------------------------------------------
     Total as per December 31,                   3,147,527            1,479,710

6.      PROPERTY AND EQUIPMENT

Property and  equipment  consist of eight modern  double hull Suezmax  crude oil
tankers.  Depreciation is calculated on a straight-line basis over the estimated
useful  life of the  vessels.  The  estimated  useful life of a new vessel is 25
years.

                                                   2005                 2004
     ---------------------------------------------------------------------------
     Opening Balance                           236,913,247          170,775,970
     Acquisitions                              294,161,063           66,137,277
     ---------------------------------------------------------------------------
     Closing Balance                           531,074,310          236,913,247

     Opening Balance                           (49,612,209)         (42,694,045)
     Depreciation                              (17,529,000)          (6,918,164)
     ---------------------------------------------------------------------------
     Closing Balance                           (67,141,209)         (49,612,209)
     ---------------------------------------------------------------------------
     Net Book Value as per December 31,        463,933,101          187,301,038

Included in the above amounts as at December 31, 2005 are drydocking charges and
ballast tank  improvements  with a net book value of $2.2 million.  Depreciation
expenses for drydocking and ballast tank improvements were $0.16 million.  There
were no such charges for the comparable  period of 2004.  The Company's  vessels
are mortgaged for amounts owing under the New Credit Facility.

7.      ADMINISTRATIVE EXPENSES
                                              2005         2004         2003
     ---------------------------------------------------------------------------
     Management fee                          100,000      175,000      250,000
     Directors and officers insurance        121,427      112,500      101,666
     Salary and wages                        635,393      165,490            0
     Audit, legal and consultants            678,858      587,831      106,281
     Outsourced administrative services    1,460,871      313,309            0
     Share-based compensation              3,582,995    9,252,365            0
     2004 Stock Incentive Plan             1,415,000            0            0
     Other fees and expenses                 497,620      245,193       10,140
     ---------------------------------------------------------------------------
     Total administrative expenses         8,492,164   10,851,688      468,087


The  decrease  in  total  administrative  expenses  is due to  the  decrease  in
share-based  compensation  caused by the  change in the terms of the  Management
Agreement with the Manager effective from October 2004. The Management Agreement
formerly  provided that the Manager would receive 1.25% of any gross charterhire
paid to the Company.  In order to further  align the  Manager's  interests  with
those  of the  Company,  the  Manager  agreed  with us to amend  the  Management
Agreement  to  eliminate  this  payment.  The  Company  issued to the Manager in
October 2004 restricted  common shares equal to 2% of the Company's  outstanding
common shares.  Any time additional  common shares are issued,  the Manager will
receive  additional  restricted  common  shares to maintain the number of common
shares issued to the Manager at 2% of our total  outstanding  common shares.  In
connection  with the follow-on  offering in March 2005,  restricted  shares were
issued  to  the  Manager  in  accordance  with  the  Management  Agreement.  The
share-based compensation expense related to the issuance of restricted shares to
the Manager of $3,582,995 in 2005 was classified as administrative expenses.

The  decrease  in  share-based  compensation  is  offset  by  increase  in other
administrative  expenses due to the change in operating  structure as of October
2004 from a passive leasing company into an operating company.

8.      SHARE-BASED COMPENSATION

2004 Stock Incentive Plan

Under the terms of the Company's  2004 Stock  Incentive  Plan, or the Plan,  the
directors,  officers  and certain key  employees  of the Company and the Manager
will be  eligible to receive  awards  which  include  incentive  stock  options,
non-qualified  stock options,  stock appreciation  rights,  dividend  equivalent
rights,  restricted stock,  restricted stock units and performance  shares.  The
Company  believes  that such awards  better align the interests of its employees
with those of its  shareholders.  A total of 400,000  common shares are reserved
for issuance upon exercise of options,  as restricted  share grants or otherwise
under the plan.  A total of 320,000  options have been issued as at December 31,
2005.

Stock  option  awards were  granted  with an exercise  price equal to the market
price  of the  Company's  common  shares  at the date of a  public  offering  in
November 2004, with later  adjustments when dividends to shareholders  exceed 3%
of the initial stock option exercise price.  Stock option awards  generally vest
equally over four years from grant date and have a 10-year contractual term.

The fair value of each option  award is estimated on the date of grant using the
Black & Scholes option  valuation model that uses the  assumptions  noted in the
following table.  Stock options to non-employees  are measured at each reporting
date and fair value is estimated  with the same model used for  estimating  fair
value of the options  granted to employees.  Because the option  valuation model
incorporates  ranges of  assumptions  for inputs,  those  ranges are  disclosed.
Expected   volatilities  are  based  on  implied  volatilities  from  historical
volatility  of the  Company's  stock and  other  factors.  Expected  life of the
options  is  estimated  to be equal to the  vesting  period for  employees  when
calculating  the fair value of the options.  When  calculating the fair value of
the options  issued to  non-employees  the expected  life is equal to the actual
life of options.  The Company recognizes the compensation cost for stock options
issued to non-employees over the service period, which is considered to be equal
to the vesting period.

Stock  options to employees are measured at fair value at the grant date and the
compensation  cost is  recognized  on a  straight-line  basis  over the  vesting
period.  The  assumptions  used when estimating the fair value at grant date are
specified in the table below.

Stock options to  non-employees  are measured at fair value at the balance sheet
date and the assumptions used are specified separately in the table below.

The risk-free rate for periods within the contractual  life of the stock options
is based on the U.S.  Treasury  yield  curve in  effect at the time of grant for
options to employees.  The risk-free  rate at year-end is used for stock options
issued to non-employees.


                                      12.31.2005        12.31.2005
-----------------------------------------------------------------------
Weighted average figures              Employees        Non-employees
-----------------------------------------------------------------------
Expected volatility                     42.60%            42.08%
Expected dividends                        3%                3%
Expected life                            3.81              9.27
Risk-free rate (range)              3.52% - 4.43%      4.53% - 4.61%

A summary of option activity under the Plan as of December 31, 2005, and changes
during the year then ended is presented below:

                                    Shares         Shares       Weighted-average
Options                           employees    non-employees    exercise price
--------------------------------------------------------------------------------
Outstanding at January 1, 2005         -                                -
Granted                             240,000        80,000            $35.70
Exercised                              -                                -
Forfeited or expired                   -                                -
Outstanding at December 31, 2005    240,000        80,000            $35.70
Exercisable at December 31, 2005     55,000        12,500            $35.70

Outstanding  and  exercisable  stock  options  as at  December  31,  2005 have a
weighted-average  remaining  term of 9.07  years  for  employees  and  9.30  for
non-employees.  The exercise price for outstanding  stock options as at December
31, 2005 is $35.70.

<TABLE>

                                                   Weighted-
                                                   average                     Weighted-average
                                                  grant-date      Options-       grant-date
                                    Options-      fair value        Non-        fair value-
                                    Employees     -Employees     employees      Non-employees
-------------------------------------------------------------------------------------------------
<S>                                  <C>            <C>           <C>             <C>
Non-vested at January 1, 2005           -              -             -               -
Granted during the year              240,000        $18.44        80,000          $22.93
Vested during the year               (55,000)       $18.65       (12,500)         $29.29
Forfeited during the year               -              -             -               -
Estimated forfeitures unvested          -              -             -               -
Non-vested at December 31, 2005      185,000        $18.38        67,500          $21.75
</TABLE>

Please refer to Note 7 in regards to the  compensation  cost related to the Plan
recognized  in the  profit  and loss  account.  Unrecognized  compensation  cost
related to the Plan is $3,831,763 as at December 31, 2005. That cost is expected
to be recognized over a weighted-average period of 1.95 years.

Restricted Shares

The Management  Agreement formerly provided that the Manager would receive 1.25%
of any gross  charterhire  paid to us. In order to further  align the  Manager's
interests  with those of the  Company,  the Manager  agreed with us to amend the
Management Agreement, effective October 12, 2004, to eliminate this payment, and
we have  issued  to the  Manager  restricted  common  shares  equal to 2% of our
outstanding  common shares at par value of $0.01 per share.  Any time additional
common shares are issued, the Manager will receive additional  restricted common
shares to maintain  the number of common  shares  issued to the Manager at 2% of
our   total   outstanding   common   shares.   These   restricted   shares   are
non-transferable  for three  years from  issuance.  During  2005 the Company has
issued to the  Manager  76,658  shares at an average  fair value of $46.74.  The
share-based compensation expense related to the issuance of restricted shares to
the Manager of $3,582,995 in 2005 was classified as administrative expenses.

The shares are considered restricted as the holders of the shares cannot dispose
of them for three years from issuance.

9.      LONG-TERM DEBT

In September 2005, the Company entered into a new $300 million  revolving credit
facility,  which is  referred  to as the New  Credit  Facility.  The New  Credit
Facility  became  effective as of October 2005 and replaced the previous  credit
facility  from  October  2004,  a portion  of which was set to mature in October
2005. The New Credit Facility will mature in September 2010.

The New Credit  Facility  provides  funding for future vessel  acquisitions  and
general  corporate  purposes.  The New Credit  Facility cannot be reduced by the
lender and there is no repayment  obligation  of the  principal  during the five
year term.  Amounts  borrowed  under the New Credit  Facility bear interest at a
rate equal to LIBOR plus a margin between 0.70% and 1.20% (depending on the loan
to  vessel  value  ratio).  The  Company  pays  a  commitment  fee of 30% of the
applicable margin on any undrawn amounts.

Borrowings  under the Credit  Facility are secured by mortgages over our vessels
and  assignment of earnings and  insurance.  We will be able to pay dividends in
accordance  with our dividend  policy as long as we are not in default under the
Credit Facility.

In February  2005, the Company  borrowed $5.0 million under the previous  Credit
Facility to finance  part of the  purchase  price of the second  vessel that was
acquired in February 2005. The borrowings were repaid in March 2005.

In September 2005, the Company  borrowed $60.0 million under the previous credit
facility to finance  part of the purchase  price of the seventh  vessel that was
acquired in August  2005,  and $7.0  million to finance the down payment for the
acquisition of the eighth vessel that was acquired in November 2005.

In October 2005,  the Company  refinanced  the borrowings of $67.0 million under
our previous credit facility by drawing on the New Credit Facility.

In  November  2005,  the Company  borrowed  $63.0  million  under the New Credit
Facility to finance  part of the  purchase  price of the eighth  vessel that was
acquired in September 2005.

Accrued  interest as per December 31, 2005 is $900,000 and is payable during the
first quarter of 2006.

10.     FINANCIAL ITEMS

Interest expense consists of interest expense on the long-term debt,  commitment
fee and loan  financing  costs related to the $300 million New Credit  Facility.
The $130 million  borrowed  bears an interest  rate equal to LIBOR plus a margin
between  0.7% and 1.2%.  The loan  financing  costs  are  expenses  incurred  in
connection  with the refinancing of the New Credit  Facility.  These charges are
amortized  over the term of the New Credit  Facility on a  straight-line  basis.
Amortization of loan costs is included in the interest expense. The amortization
of loan financing costs was for the years 2005, 2004 and 2003 $717,910, $112,838
and $14,480 respectively.  Total capitalized loan financing costs are $1,713,835
as per December 31, 2005 and as per December 31, 2004 $1,357,140.

The amortization of loan financing costs for the years 2006 to 2009 are $364,000
per year and $257,835 for the year 2010.

The  commitment  fee is based on 30% of the  applicable  margin  on any  undrawn
amounts.

11.     DEFERRED REVENUE

Deferred revenue of $537,055 represents prepaid freight received from one of the
Company's  customers  prior to December  31,  2005,  for services to be rendered
during January 2006.

12.     TOTAL CURRENT LIABILITIES

                                                              2005         2004
    ----------------------------------------------------------------------------
    Accounts Payable                                       751,977      411,366
    Accounts Payable, Technical & Commercial Managers      784,425            0
    Deferred Revenue                                       537,055    1,286,070
    Accrued Interests                                    1,170,044            0
    Accrued Expenses, Technical & Commercial Managers    1,459,445            0
    Other Current Liabilities  <5%                         269,336      637,582
    ----------------------------------------------------------------------------
    Total Current Liabilities                            4,972,282    2,335,018

13.     STOCK HOLDERS' EQUITY

Authorized, and issued and outstanding common shares roll-forward is as follows:

                                                          Issued and
                                         Authorized       Outstanding
                                          Shares            Shares
    -------------------------------------------------------------------
    Balance at 01.01.04                  51,200,000        9,706,606
    Issuance of Common
    Shares in
    Secondary Offering                                     3,105,000
    Share-based Compensation                                 256,232
    -------------------------------------------------------------------
    Balance at 12.31.04                  51,200,000       13,067,838
    -------------------------------------------------------------------

    Issuance of Common
    Shares in
    Secondary Offering                                     3,500,000
    Share-based Compensation                                  76,658
    -------------------------------------------------------------------
    Balance at 12.31.05                  51,200,000       16,644,496
    -------------------------------------------------------------------

The total issued and outstanding  shares as of December 31, 2005 were 16,644,496
shares of which 332,890 shares were restricted as described in Note 8. The total
issued and outstanding  shares as of December 31, 2004 were 13,067,838 shares of
which 256,232 shares were restricted as described in Note 8.

14.     DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT

In 2003, the Company had  outstanding a $30 million  variable rate loan that was
repaid in November 2004. The Company had hedged the variable  interest  exposure
by an interest  rate swap  whereby the Company  paid a fixed  interest  rate and
received a variable interest (LIBOR). The interest rate swap was designated as a
cash flow hedge of the interest  payments on the loan.  The  interest  rate swap
matured in 2004. The Company did not hold any derivative instruments at December
31, 2005.

The effective  portion of gains and losses on the interest rate swap  designated
as a cash flow hedge was deferred to accumulated other comprehensive  income and
was  reclassified to earnings as the hedged interest  payments were  recognized.
The Company reclassified  $1,170,000 from accumulated other comprehensive income
to earnings in 2004. The reclassified loss was included in interest expense.

The fair value of the swap was recorded as a liability of $1,150,000 at December
31, 2003.

15.     COMMITMENTS AND CONTINGENCIES

Litigation  and  Environmental  Matters  -The  Company may be a party to various
legal  proceedings  generally  incidental  to its  business  and is subject to a
variety of environmental and pollution  control laws and regulations.  As is the
case with other companies in similar industries, the Company faces exposure from
actual  or  potential  claims  and  legal  proceedings.  Although  the  ultimate
disposition of legal proceedings  cannot be predicted with certainty,  it is the
opinion of the Company's management that the outcome of any claim which might be
pending or threatened, either individually or on a combined basis, will not have
a materially adverse effect on the financial position of the Company,  but could
materially affect the Company's results of operations in a given year.

16.     SUBSEQUENT EVENTS

In February  2006,  the Company  agreed to acquire a double hull Suezmax  tanker
from an unrelated third party for a purchase price of $69.0 million.  The vessel
was delivered to the Company on April 10, 2006.

In March 2006, the Company sold 4,297,500  shares  (including  shares sold under
the  over-allotment  option)  in a  public  offering  in the  U.S.  to fund  the
acquisition  of the  ninth  vessel,  repay  outstanding  debt  and to  fund  the
acquisition  of the tenth  vessel  that the Company is  actively  pursuing.  The
offering  was priced at $28.50 per share,  and net  proceeds to the Company were
$115.2 million.

In April 2006, the Company  borrowed $69.0 million under the New Credit Facility
to finance the ninth vessel delivered to the Company on April 10, 2006.

<PAGE>

ITEM 19.    EXHIBITS

1.1  Memorandum  of  Association  of the Company  incorporated  by  reference to
     Exhibit 3.1 to the Company's  registration statement on Form F-1 filed with
     the Securities and Exchange Commission on August 28, 1995 (Registration No.
     33-96268).

1.2  Bye-Laws of the Company  incorporated  by  reference to Form 6-K filed with
     the Securities and Exchange Commission on November 18, 2004.

2.1  Form of Share  Certificate  incorporated by reference to Exhibit 4.1 to the
     Company's  registration statement on Form F-1 filed with the Securities and
     Exchange Commission on August 28, 1995 (Registration No. 33-96268).

4.1  Form of Bareboat  Charter between Nordic  American Tanker Shipping  Limited
     and BP Shipping  Ltd,  incorporated  by  reference  to Exhibit  10.3 in the
     Registration Statement filed on Form F-1, Registration No. 33-96268.

4.2  Form of  Management  Agreement  between  Nordic  American  Tanker  Shipping
     Limited and Ugland Nordic  Shipping AS incorporated by reference to Exhibit
     10.8 in the Registration Statement on Form F-1, Registration No. 33-96268.

4.3  Novation  Agreement  dated May 30, 2003,  among Ugland Nordic  Shipping AS,
     Scandic American  Shipping Ltd. and Nordic American Tanker Shipping Limited
     incorporated  by  reference  to Exhibit  4.3 in the  Annual  Report for the
     fiscal year ended December 31, 2002 on Form 20-F, filed with the Securities
     and Exchange Commission on June 27, 2003.

4.4  Amended and Restated  Management  Agreement dated October 12, 2004, between
     Scandic American  Shipping Ltd. and Nordic American Tanker Shipping Limited
     incorporated  by  reference  to Form  6-K  filed  with the  Securities  and
     Exchange Commission on October 29, 2004.

4.5  2004 Stock  Incentive Plan  incorporated by reference to Exhibit 4.5 to the
     Company's annual report on Form 20-F for the fiscal year ended December 31,
     2004 filed with the Securities and Exchange Commission on June 30, 2005.

4.6  Revolving  Credit  Facility  Agreement  by and  among the  Company  and the
     financial  institutions  listed in schedule 1 thereto,  dated September 14,
     2005.

12.1 Rule 13a-14(a) Certification of the Chief Executive Officer.

12.2 Rule 13a-14(a) Certification of the Chief Financial Officer.

13.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C.  Section
     1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

13.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C.  Section
     1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

23.1 Consent of Deloitte Statsautoriserte Revisorer AS.

<PAGE>

                                   SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F and that it has duly caused and authorized the  undersigned to sign
this annual report on its behalf.

                                    NORDIC AMERICAN TANKER
                                    SHIPPING LIMITED



                                    By:    /s/ Herbjorn Hansson
                                    -----------------------------
                                    Name:      Herbjorn Hansson
                                    Title:     Chairman, Chief Executive Officer
                                               and President

DATED:  June 29, 2006